Proudly EMPOWERING South Africans - Adcorp · 6 Adcorp Annual ReportThe Power of Potential ABOUT ADCORP The Adcorp Group has a rich history dating back to 1978. It has been the leading

Proudly EMPOWERINGSouth Africans

Annual Report 2009

Contents

Company overview 1 – 12

Our history 2

Strategic priorities 4

Performance against stated targets 5

What makes us who we are 6

Group at a glance 7

Our proud history of empowerment 8

Industry leaders 9

Our industry 10

Executive reports 13 – 22

Chairman’s report 14

Chief Executive’s report 16

Corporate governance 23 – 32

Board of directors 24

Employment equity 30

Corporate social investment 31

Financial statements 33

Shareholders’ information 83

Group achievements

Diluted core headline earnings per share up by 19%

Final dividend declared of 160 cents per share

Normalised operating profit up by 28%

Cash conversion ratio 81%

EBITDA margin up to 6,7%

Debtors at 35 days

Ranked SA’s top empowered company listed on the JSE interms of the Financial Mail’s Top Empowerment CompaniesSurvey rated by Empowerdex for 2008 and 2009

What shareholders can expect

• Total transparency in the conduct of the affairs of thebusiness

• Sound corporate governance

• A primary focus on cash generation (as priority over reported profit)

• A focus on organic growth centred around marginmanagement as well as growth achieved through strategicacquisition

• A return of excess cash resources to shareholders within the confines of maintaining an acceptable level of gearing

• A commitment to broad-based black economic empowerment(BBBEE) and transformation

T H E P O W E R O F P O T E N T I A L

The Power of Potential Adcorp Annual Report 1

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Company overview

Our role in facilitatingemployment is highlighted byour continued organic growth

2 Adcorp Annual Report The Power of Potential

Our history...

1978

STRA

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Adcorp is born

1987

Initial public offeringon the JSE

1999

Acquisitive Adcorpgrows to 38 companies

Sunday Times Top100 Award for theBest PerformingCompany on the JSE

2001

Acquisition ofAcumen concluded

Turnaround strategycommences focusingon cash and marginmanagement

2004

Consolidate nineunderlyingbusinesses toestablish AdcorpTalent Resourcingand JobVest asEmployerBranding andRecruitment ProcessOutsourcing(RPO) specialists

Third year of strongeconomic growth

BBBEE-rated first inservices sector

128% of profitconverted to cash

Entrepreneurial Adcorp withinformal leadership style

Acquisitive; product-centric and EPS driven


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2006

Strategy implementedto simplify the Groupand focus on corebusiness

Enterprise Developmentinitiative establishedthrough a managementbuy-out of Simeka TWSand Graphicor

Acquired Employ-Rite

BBBEE first inservices sector

2007

BBBEE transactionconcluded withconsortium comprisingWiphold, Simeka and Employee Share OptionPlan (ESOP)

Acquired FMSMarketing Solutions

Acquired CapitalOursourcing Group

Sale of ResearchSurveys to TNS (UK)

Sale of Career Junction

20 years listed

BBBEE first inservices sector

2008

Continued strongfocus on organicgrowth and strategicacquisitions

Top listedempowermentcompany

30th year ofsuccessful trading

2009

Adcorp’s Employment Index is launched which reflects theemployment outlook in SA. It is compiled by looking atthe drivers of employment inthe macroeconomy, labourdemand, labour supply andremuneration trends

SA’s top empoweredlisted company and onlycompany with a level 2 BEE score

22nd year anniversary asa JSE-listed company

Back to basics Leveraging the core; focus oninnovation; integrating into the

client environment

Using market conditions to build amore robust, sustainable, market

leading and dominant business model.Positioned well for economic upswing.


Strategic priorities

To position the Group as the leading provider of human capital management and business processoutsourcing services offering:

• comprehensive staffing and recruitment services and solutions;

• business process outsourcing (BPO) services; and

• relevant employee benefit, financial, wellness and lifestyle products and services to our sizeablecontract workforce.

Adcorp’s current strategic priorities are to:

• protect top-line business as far as possible;• realise the potential of identified productivity and efficiency improvement initiatives;• focus on cash generation;• seek out quality acquisitions;• lobby for friendly regulation; and• retain top talent.

The focus is to use existing market conditions to build a more robust, sustainable, market leading anddominant business model positioned well for the economic upswing.

Through a concerted focus on operational excellence, Adcorp has developed extraordinary relationshipswith its clients and candidates alike.

Empowering our people, empowering our clients and empowering our country.

Our mission...

Strategic priorities


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Cash generated to operating profit

Perce

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Target0908060504

Debtors days

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*2008 14 months annualised.

Performance against stated targets


ABOUT ADCORPThe Adcorp Group has a rich history dating back to 1978. It has

been the leading listed staffing and business services company since

1987 and has received numerous awards for its achievements.

Today, Adcorp’s services are focused on key staffing activities,

namely the recruitment, development and placement of people into

positions of employment, be it on a permanent, temporary, flexi-

and fixed-term contract basis. It also addresses the competitive

positioning of its respective clients through its business process

outsourcing and recruitment process outsourcing services.

AWARDSADCORP AWARDS• Recognised as the “most empowered listed company in South

Africa” in terms of the Financial Mail/Empowerdex Top

Empowerment Companies Survey 2008 and 2009.

• Sunday Times/Business Times Top 100 Companies – recognised

as one of the top 100 companies in South Africa.

• Ranked 1st in the Leadership Excellence Business Support

Services category awarded by the Corporate Research

Foundation (CRF).

• Category winner in the Annual Report Awards – “The benchmark

for governance reporting in Africa”.

• Investment Analysts Society of Southern Africa award for

reporting and communications – Companies with a market

capitalisation below R5 billion.

GROUP COMPANY AWARDSEmmanuels• Recruiter of the year – Junction Awards (Career Junction).

• Best HR Service Provider (Outsourcer) – KZN on Source

Regional BPeSA Awards.

• Best HR Service Provider (Outsourcer) – Calling the Cape

Regional BPeSA Awards.

QuestQuest was National Winner and placed in the top three in the award

for Best Contact Centre Support Professional – Workforce

Planning; and for the prestigious Best Outsourcing Partner at the

(EMEA) Europe, Middle East and Africa Contact Centre World

Awards held in London – June 2008.

CapacityTopco National Business Awards – Winner in the National Business

Services Category.

DAVPMR Diamond Arrow Award “Best Staffing Solutions Provider”.

PMR Diamond Arrow Award “Best Office Staff Provider”.

Career Junction Survey August “Recruiter of the Year Permanent

Positions”.

PMR Golden Arrow Award February “Outstanding Executive

Search Consultancy”.

What makes us who we are

CHAIRMAN’S AWARDSAdcorp’s premier event of the year is the Chairman’s

Awards. This event is dedicated to those employees

that have earned recognition and honour for their hard

work and commitment whereby individual employees

and Group companies are recognised and rewarded for

their exceptional achievements and contributions.

Adcorp prides itself on its solid performance and

sustained growth achieved over the past years, all of

which would not have been possible without the

exceptional contribution of its people.

Left: Adcorp CEO, Richard Pike with 2009 Chairman’s Awardwinner Stacey Niewenhuizen and alternate director, Gugu Duda


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FLEXIBLE PERMANENT

• Brand development• Strategic staffing advisory services• Recruitment advertising• Employer branding• Role profiling• Candidate response management• Psychometric assessment and selection• Talent management• Recruitment process outsourcing (RPO)• Tender management• Business process outsourcing• Payroll outsourcing• Mass recruitment and respone handling for

large-scale projects• Added value services to policyholders of

insurance companies and members of affinitygroups

• Diverse talent pool uniquely positioned tomatch the demands of the market

• Dominant market position• Unique, market-leading product and service

offerings• A people-centred organisation with a culture of

deliberate curiosity staffed by talentedprofessionals

• Extraordinary relationships with clients• Cutting-edge thinking supported by technical

and process excellence• Equipped to handle high volumes and select

the best candidates in quick turnaround times• Brands the employer thereby creating an

identity which will attract employees who willrelate to the skill and culture requirements

• Unique subcontracted provider network• Role profiling, candidate assessment and

selection profiling within a quantifiable,consistent, scientifically verified and legallycompliant framework

• Growth in high-volume, fast turnaroundrecruitment projects

• Employer branding achieves better results forless cost

• Growth in the employee benefit industry • Rollout of new products and services to

existing client base and temporary workforce

• Temporary staffing assignments• Contract staffing solutions• Workforce optimisation• Learnership implementation and

administration• Leadership and management development• Customised, strategically aligned,

corporate training solutions• Comprehensive offering of business

relevant, accredited education and trainingprogrammes

• Productivity-enhancing service offerings• Market leaders in differentiated

recruitment practices• Learning as an integrated part of a

flexible workforce management solution• Sophisticated workforce optimisation

technology to unlock optimum clientbenefits

• Database in excess of 250 000 candidatesover all levels, skills sets and variousindustries

• Measurable performance against definedservice level agreements

• Employment equity record of 68% PDI(previously disadvantaged individuals)placements

• Credible black economic empowermentprofile

• Action-based training approach: learn –apply – measure

• Fully accredited training offerings• Ability to measure efficiency of training

in the working environment • Sustainability of benefits for clients • Ability to customise offerings

• Growth in outsourcing of non-corefunctions by clients

• Desire by organisations to match labourinput costs to variable market demand

• Rapid expansion of call centres in SouthAfrica

• Growth in learnerships established interms of the Skills Development Act

• Contingent database selection• Talent search• Executive search• Internet recruitment• Candidate assessment and selection• Turnkey managed staffing solutions

• Candidate sourcing spanning numerousleading, branded consultancies combiningunrivalled knowledge, experience,databases and advertising reach

• Intimate client relationships facilitating thedevelopment of unique human capitalstrategies and resource planning

• Unique broad range of recruitment servicesenabling fully outsourced recruitmentofferings

• Growth in the South African economy,particularly the construction andinfrastructure sectors

• Critical shortage of key skills categories• Demand for exclusive single supplier,

managed staffing solutions

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Group at a glance

BUSINESS PROCESS OUTSOURCINGSTAFFING


EMPOWERMENTThat South Africa is saddled with a legacy of severe socio-

economic imbalance between predominantly white and black

citizens is not a matter of dispute. The challenge lies in how to

remedy this imbalance. In the private sector, the challenge has

been to help remedy this imbalance through a policy and

process of broad-based black economic empowerment

(BBBEE).

BBBEE operates on seven levels: Shareholding; Management

Control; Employment Equity; Skills Development;

Procurement; Enterprise Development and Socio-economic

Development.

Government has indicated that it intends to move away from a

compulsory to an enabling policy of BBBEE. This places an

enormous responsibility and obligation on companies such as

Adcorp.

The Group has a proud history of empowerment dating back

as far as 1990. At a shareholding level, a Group-wide

transaction was announced in 2007 that has significantly

bolstered the empowerment credentials of the Group while

also creating an opportunity for all Adcorp employees to share

in the Group’s financial fortunes. In terms of this BBBEE

transaction, a consortium comprising women’s grouping,

Women Investment Portfolio Holdings (Wiphold), Simeka

Group (Pty) Limited and an Adcorp employee share incentive

trust own an effective 25,1% shareholding in Adcorp Holdings

Limited. The Group’s overall black ownership in terms of the

BEE scorecard has been certified by Empowerdex to be

33,33%. Direct black female ownership in Adcorp Holdings is

calculated to be 9,12%, using the modified flow-through

principle. For the purposes of the scorecard, black female

ownership is deemed to be 15,25% after the exclusion of the

40% shareholding that is classified as a Mandated Investment.

Because BBBEE has been a real part of who we are and what

we do, we have incorporated it into every part of our business.

This is why the Adcorp Group has for the last two years been

recognised as the most empowered listed company in South

Africa in terms of the Financial Mail/Empowerdex Survey.

Furthermore, we have been rated as the most empowered

company in our sector for the last four years. We are the only

listed group in South Africa that has been rated

as a level 2 BBBEE contributor in terms of the Department of

Trade and Industry’s BBBEE Code of Lead Practice.

Something we are truly proud of.

Our proud history of empowerment

The Adcorp Group has for the last two yearsbeen recognised as the most empowered listed

company in South Africa

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Since the birth of our new democracy in 1994, the South Africanstaffing industry has grown exponentially. Largely due to relativelylow barriers to entry, there has been a proliferation of agenciesproviding recruitment and related services. It is an environmentwith relatively high levels of competition and relatively low levelsof industry knowledge sharing, especially regarding the industry’scontribution to job creation and employment. Limited nationalquantitative employment data and information has exacerbated this problem.

In order to address this employment knowledge gap, Adcorplaunched the Adcorp Employment IndexTM in March 2009, whichreflects the employment outlook in SA. It is compiled by looking atthe drivers of employment in the macro-economy, labour demand,labour supply and remuneration trends. As employment takes onmany forms, this comprehensive index encompasses statisticsaround permanent; temporary; fixed-term contracts; flexiblestaffing; and seasonal employment.

The index charts more than just the supply and demand for skills: itcovers the macro-economic implications as well as theremuneration dynamics impacting the industry. This four-prongedapproach allows for a holistic, scientifically validated and cross-referenced index that ultimately forms the quantitative andqualitative Adcorp Employment IndexTM.

Industry leaders

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ADCORP EMPLOYMENT INDEX

ADCORP EMPLOYMENT INDEX87,71 ▼ -12,9%

Legend of gauge:

Green – increase in employment

Yellow – holding on to current employees – retrenchments

Red – large-scale retrenchment

87.71


Our industry

9 449; 30%

2 150; 7%

738; 2%1 299; 4%

1 360; 4%357; 1%1 785; 6%188; 1%494; 2%1 215; 4%

5 634; 18%

2 693; 9%

1 767; 6%1 042; 3% 816; 3%

Formal sector (non-ag) (30%)

Informal sector (non-ag) (7%)

Agriculture (2%)

Private households (4%)

Job losers (4%)

Job leavers (1%)

New entrants (6%)

Re-entrants (1%)

Other (2%)

Discouraged work-seekers (4%)

Students (18%)

Home-maker (9%)

Illness/Disability (6%)

Too old/young to work (3%)

Other (3%)Our focus and value-add

Our f

ocus

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value

-add

South Africa has close to 48 million citizens with a labour force of

approximately to 31 million and an unemployment rate of 23,5%.

Nine and a half million people (30%) are employed in the formal

sector. Two million people (7%) are employed in the informal sector.

Close to 1,3 million people (4%) are employed in private households

and 738 000 people (2%) are employed in the agricultural sector.

Just over 4 million people (23,8%) are unemployed; 5,6 million

people are in educational institutions; 13,5 million people are on

social welfare; and we have 1,8 million people in South Africa that

are disabled.

Adcorp and the South African staffing industry is predominantly

focused on providing services to those new entrants, re-entrants; job

leavers and those who have lost their jobs or 13% of the total

THE MAKE-UP OF THE SA WORKPLACE

workforce. A proportion of those seeking employment find work

through our permanent placement, recruitment advertising and

response handling agencies. Others, especially those with limited

qualifications and experience, find employment opportunities

through our temporary and flexible staffing agencies often referred to

as Temporary Employment Services (TES). In most of these cases

these individuals go through a rigourous process of empowerment

through our knowledge and experience transfer interventions.

Throughout this process they have gainful employment accompanied

by all elements related to decent work including compensation,

benefits, personal development and protection of their rights. Around

40% of TES assignees are covered by Bargaining Council wage

agreements and the balance fall under Sectoral Determinations

or BCEA.

*Make-up of South African workplace (Figures in 000’s).


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ionTEMPORARY EMPLOYMENT SERVICES’(TES) CONTRIBUTION TO EMPLOYMENTCREATION: THE PATH TO DECENT WORK INSOUTH AFRICA

Temporary employment services represent a

R26 billion sector with 5 120 businesses

operating nearly 7 000 recruitment centres

around South Africa. In 2008, the daily average

headcount of contract employees was 902 350

(managed by agencies) or 2 739 315 (managed

by agencies and by employers directly). Over

the past decade, Services SETA figures indicate

that employment agencies contributed

R415 million to the National Skills Fund. Since

2000, contract employment agencies introduced

around 3,5 million temporary, part-time and

contract employees into the South African

work-force, approximately 2 million of whom

were first-time job-seekers, 92% of whom are

African, and 85% of whom are youth aged

between 18 and 35. More than 32% of these

employees secured traditional, permanent jobs

within 12 months of commencing a contract

assignment and 47% did so within a period of

three years from commencement of a contract

assignment. Contract employees represent

23,9% of total employment in South Africa,

varying from 13% in the mining sector to 59%

in the construction sector. In total, the industry

supports 1 million people directly, and

3,6 million indirectly.

Temporaryemploymentservices (TES)represent aR26 billionindustrial sector

Total employment:13,6 million

Total contractemployment:3 million

Contractworkforcemanaged byagencies:1 million

Estimated number ofdependants on contract workforce: 4,6 million

7 000 branchoffice countrywide

1 million contract employees managed by agencies at any point in time.3,5 million contract employees introduced to the world of work since 2000

Workforceoptimisation

Career progression

Performanceenhancement

Workplace readiness

Talentacquisition

Contract employee demographicscontract employee (percent of total sector employment)

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32% convert to permanentemployment

92% previouslydisadvantaged

85% youth aged 18 to 35 years

50% neverpreviouslyemployed

TEMPORARY EMPLOYMENT SERVICES’ (TES) CONTRIBUTION TO EMPLOYMENT CREATION: THE PATH TO DECENT WORK IN SOUTH AFRICA


Our industry (continued)

The presence of vibrant and competitive private sectorintermediaries in the job facilitation process is an enormous nationalasset. The key advantages of this industry are as follows:• Up-to-date nation-wide databases of job-seekers and available

employment opportunities.• Innovative and scientifically validated assessment tools and

processes that assess job-seekers’ “fit” and potential in differentroles, companies and industries.

• Workplace readiness programmes that combine traditionalclassroom-style learning with on-the-job training in a real-worldenvironment.

• Performance enhancement and career progression services that assist with organisations’ performance objectives andemployees’ job mobility.

• Scaleable technology and branch office infrastructures thatsupport a large number and wide range of employment services,including payroll services, absenteeism management andaccounting services, among others.

• Workforce scheduling services that allow organisations tomatch hourly, daily, weekly and other cyclical fluctuations inlabour demand with skilled and available human resources.

• Workforce optimisation services that allow organisations tooptimise their labour productivity and costs to achieve globalcompetitiveness.

CONTRACT LABOUR: A VITAL COMPONENT TO EFFECTIVELYCOMPETE IN VOLATILE MARKETSThe above graph shows a strong relationship between economic

volatility at the sector level, and the use of the contract employees in

that sector.

The underlying basis for this relationship appears to be that the more

volatile a particular sector, the more difficult it is to predict future

output and demand levels in that sector, the greater the need to alter

employment levels in light of changing business circumstances,

and the higher the proportion of contract and other non-permanent

employees.

010203040506070

2 4 6 8 10 12

Agriculture, forestryand fishing

Mining and quarryingElectricity, gas and water

Construction

Wholesale and retail trade,hotels and restaurants

Personal services

General governmentservices

Finance, real estate andbusiness services

Transport, storageand communication

Manufacturing

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Standard development of quarterly changes in natural log of nominal GDP

CONTRACT LABOUR: A VITAL COMPONENT TO EFFECTIVELY COMPETE IN VOLATILE MARKETS


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Executive reports

Over 32% of temporaryemployees convert topermanent employment within12 months, 47% within 3 years.


Chairman’s report

The Adcorp Group has continued to perform well over the pastfinancial year despite tougher economic conditions.

Diluted core headline earnings per share were some 19% ahead of the prior year, which is a very encouraging result given thedeteriorating economic climate.

This has been achieved through a process of proactive positioningwhereby the focus of the Group has tended to be in those areas of theeconomy that are more robust and resilient in addition to having awell-constructed strategic agenda.

During the year under review, Adcorp has further entrenched itself asthe leading provider of human capital management and businessprocess outsourcing services in the South African economy andcontinues to play a meaningful and highly relevant role in the SouthAfrican labour market.

Given the current unacceptably high unemployment rate in SouthAfrica, coupled with the prospect of further substantial job lossesresulting from the recent economic downturn, the Adcorp Groupviews its role as more critical than ever in terms of introducing newentrants into the formal job market as well as in terms of thesignificant role it plays in skills development.

Against this backdrop, there has been a strong lobby initiated by thetrade union movement, and Cosatu in particular, in calling for a banor stringent regulation of the practice of “labour broking” due toperceived exploitative labour practices perpetrated by this industry.The Cosatu torch in this regard has also been carried by the recentlyreappointed Minister of Labour.

What has been useful regarding the recent prominence and publicitythis debate has received is that it has enabled the temporaryemployment services (TES) industry to showcase the positive role itplays in terms of job creation, productivity improvement and skillsdevelopment which unfortunately, has largely been misunderstoodby Government and the labour movement alike up until recently.

There now seems to be a far greater understanding and appreciationof the role of the industry by the Minister of Labour in particular andalso an understating that, whilst there is potentially a minority rogue“labour broking” element guilty of certain exploitative labourpractices, there is also a high proportion of industry players thatmake a positive and meaningful contribution to the South Africaneconomy and the South African workforce as a whole.

As such, it is likely that any impending legislation or regulation will

hopefully have a positive bearing on the industry.

Much of this is credit to the representation the industry has received

through the Confederation of Associations in the Private

Employment Sector (CAPES) which represents the industry’s

interests in this regard in the National Economic Development and

Labour Council (Nedlac) deliberations in terms of its affiliation with

Business Unity South Africa (BUSA) as well as the opinion leading

role that Adcorp has played in this matter.

Black economic empowerment (BEE) remains one of the major

challenges facing the Group and one which the Adcorp Group has

embraced and taken extremely seriously over the past years. Adcorp

recently won the Financial Mail/Empowerdex Top Empowerment

Companies 2009 Award as the most empowered company listed on

the JSE Limited for the second year running and was rated as the

only level 2 BEE contributor listed on the JSE.

This is an award we at Adcorp cherish and recognise the many

proactive black economic empowerment initiatives the Group has

embarked upon in the past years.

The Group has also committed itself to a high standard of corporate

governance and transparency in the conduct of the affairs of

the business.

In this regard, the Group recently won the 2009 Investment Analyst

Society of Southern Africa award for the best presentation to the

society for those companies with a market capitalisation under

R5 billion and also was a 2008 category winner in the Annual Report

Awards – “The benchmark for governance reporting in Africa”.

During the past year, whilst arguably stronger than many other

economies, South Africa has demonstrated that it is not immune to

the ravages of the ongoing global recession. It is also hard to

determine how deep and how protracted the current recession

will be.

As such, the trading environment in which Adcorp finds itself is

definitely tougher than in the recent past and much of the strategic

focus is therefore on unlocking internal efficiencies, retention of

existing business, offering value-for-money products and services to

clients and on retaining top talent.


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The strategic agenda is therefore relatively defensive in nature whilstalso offering a measure of offensive tactics in those areas where webelieve we can positively impact on the productivity and efficienciesof our clients.

Ironically, it is in tough economic times that clients tend to be moreamenable to value-added propositions than in good times.

In facing the challenges ahead, I am confident that there is clarity ofpurpose and that the Group is well positioned to tackle whatevereconomic challenges may lie ahead.

In addition, the role that Adcorp plays in the economy andspecifically in terms of job creation and skills development has longbeen an understated one and I believe that it is in times like these thatthese offerings come to the fore and are duly recognised.

Whilst I am under no illusions that the ensuing trading conditions willbe substantially more difficult than we have endured in the past, Ibelieve that the strategic path the Group has chosen as well as itsunique positioning will stand us in good stead to weather whatevereconomic storm may blow our way.

Dr F Van Zyl SlabbertChairman

“I believe that thestrategic path the

Group has chosen aswell as its unique

positioning will stand usin good stead to weather

whatever economicstorm may blow

our way”.


Chief Executive’s report

OVERVIEWDespite tougher overall trading conditions, the Adcorp Group onceagain produced a solid financial performance for the year ended 28 February 2009.

In this regard, diluted core headline earnings for the year of 389,4 cents per share (2008: 327,4 cents per share) were some 19%ahead of comparable diluted core headline earnings per share for theprior year.

This result has been achieved due to the relatively strong positioningof the Group with regard to the relevance of its product and serviceofferings as well as the efficiency of its operations in relativelychallenging economic times.

The strong blue-collar bias of the flexible staffing operations, theongoing skills shortage, the sustainably differentiating value-addingproduct and service offerings, the blue-chip client base, selectiveindustry exposure, proactive leadership focused on continuousproductivity and efficiency improvement initiatives coupled withcertain recent quality acquisitions, have all contributed to a financialperformance that has been far more robust than general SouthAfrican economic and employment data would suggest.

In this regard, the blue-collar flexible staffing, permanent recruitmentand business process outsourcing (BPO) operations of the Groupcontinued to perform well and to deliver strong earnings growth.

The financial performance of the white-collar flexible staffingbusinesses, however, was negatively affected by sustained volumeand margin pressure emanating principally from the retail bankingsector. In response, these businesses implemented timely downsizingand cost-cutting initiatives in order to limit the negative impact onGroup profitability.

The EBITDA margin improved to an average 6,7% compared to theprior year average of 6,5%. This has been achieved by way of asustained focus on improving operating margins as well as animproved mix of business, despite the adverse margin impact of thewhite-collar flexible staffing businesses.

Debtors’ days outstanding slipped to an average 35 days outstandingcompared to the previous year-end level of 30 days outstanding dueprimarily to late payment by three large public sector clients, whichskewed the result.

Subsequent to the year-end, two of these overdue amountsoutstanding have now been collected.

Given the deteriorating economic conditions experienced in theSouth African economy, the collection of debtors has definitelybecome more difficult as businesses try to conserve their cashresources by stretching credit terms.

As such, the urgency to pay particular attention to managing thecash-to-cash cycle of the business is now more important than everand enjoys a prominent role on management’s strategic agenda.

FINANCIAL TARGETINGStrategically, the Group adopted a philosophy of financial targetingin the 2002 financial year.

The key financial return criteria focused on by the Group’smanagement team is return on assets managed (“ROAM”), which isbenchmarked against a target to ensure the achievement of superiorfinancial returns to shareholders well in excess of the firm’sweighted average cost of capital (“WACC”). The WACC, in turn, iscalculated with reference to an optimal capital structure introducingan ideal mix of debt and equity as reflected by the Group’s gearing target.

In this regard, the Group once again exceeded its targets delivering areturn on assets managed of 43,8% against a target of 33,0%.

In achieving this result, the return on sales (“ROS”) or operatingmargin achieved was 6,2% versus a target of 5,5%, whilst the assetturnover (“ATO”) ratio was 7,1 times versus a target of 6,0 times.

The philosophy of the Group has been to place major emphasis onthe cash-generating potential of the operations. As such, a cashconversion target of 90% is the stated objective of managementwhereby the Group strives to convert 90% of its operating profit intocash. In this regard, the Group fell marginally short of its targetwhereby 81% of operating profit was converted into cash due to adeterioration in debtors days outstanding to 35 days versus a targetof 33 days as previously mentioned.

Whilst remaining within the confines of the Group’s financial year-end targeted gearing level of 47% versus an actual gearing level of38%, the Group was able to declare a final dividend of 160 cents pershare (2008 final dividend: 160 cents per share).

Combined with the interim dividend declared of 62 cents per share,this brought the total dividends declared for the year under review to222 cents per share (2008: 215 cents per share), which represents a3% increase in dividends.


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MACRO-ENVIRONMENTGiven the recent slowdown of the global economy and the resultantcontraction in economic growth in South Africa, the priority remainsnot only to create more jobs in the economy but also to protect existingjobs in an environment where unemployment runs at unacceptablyhigh levels.

Compounding this problem is the lack of reliable, objective andcomprehensive statistics with regard to the employment market.

In order to assist in addressing this problem and to provide a “dip-stick” view of the state of the overall employment market inSouth Africa, Adcorp recently initiated an “Adcorp EmploymentIndexTM” which was first published in March 2009.

It is the intention to publish this index on a quarterly basis thusfacilitating a better, holistic understanding of the complex SouthAfrican employment environment.

As employment can take on many different forms, thiscomprehensive index encompasses statistics around permanent,temporary, fixed-term contracts, flexible staffing, and seasonalemployment.

Adcorp’s Employment IndexTM charts more than just the supply anddemand of skills, it also covers the macroeconomic implications as

well as the remuneration dynamics impacting the industry. Thisapproach allows for a holistic, scientifically validated and cross-referenced index.

The index uses the 2005 calendar year as the base year indexed at anaverage 100 points.

The latest published index in respect of the first quarter of 2009reflects an index value of 87,7, which represented a quarter-on-quarter decline of 12,9% indicating that the overall environment foremployment in South Africa has become much more negative and isexpected to remain so until well into 2010.

What is evident, however, is that certain industry sectors haveperformed better than others with the construction, logistics andwarehousing, communications and information technology,government and personal services sectors remaining relativelyrobust and showing net employment growth.

The sectors that are under substantial strain and show employmentlosses are mining, manufacturing, retail and wholesale trade as wellas finance, real estate and business services.

The index also reflects that certain skills sets remain in high demand,particularly in the financial services, engineering, natural andphysical sciences, medical and health, education as well asinformation and communication technology sectors.

The performance of the Group against stated financial targets for the year ended 28 February 2009 was as follows:

Financial Year to Year totarget Feb 2009 Feb 2008

Return on assets managed (ROAM) 33,0% 43,8% 40,5%Return on sales (ROS) 5,5% 6,2% 5,9%Asset turnover (ATO) – times 6,0 7,1 6,8Cash conversion ratio 90% 81% 141%Debtors days 33 35 30Interim gearing target* 47% 38% 31%

* Long-term gearing target set at 30%.

A summary of dividends declared in respect of the year under review is as follows:Total dividends (cents) 222 215

Interim dividend (cents) 62 55Final dividend (cents) 160 160


Chief Executive’s report (continued)

In terms of demand for priority skills, certain industrial sectors, suchas mining, automotive and retail banking, show a stronger negativebias whereas sectors such as construction, wholesale and retail trade,transport and communications remain relatively robust in terms ofemployment prospects.

In addition, the skills shortage with regard to certain trades, such asengineers, artisans, construction workers, information andcommunication technology professionals, certain financial skills,general management and drivers, remain in relatively high demand.

Given the Adcorp Group’s focus in the area of scarce skills as wellas the Group’s specific exposure to more robust industrial sectors,the performance of the Group should continue to outperform theperformance of the average Adcorp Employment IndexTM as hashistorically been the case.

The graph below depicts the revenue exposure of the Group to eachconstituent individual economic sector of the South Africaneconomy as plotted against 2008 employment growth for each ofthose industrial sectors.

-15

-10

-5

0

5

10

15

20

25

30

35

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and

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-0,90%

31,61%

-0,10%

26,82%

4,90%

24,27%

2,20%

9,28%

0,80%

5,45%

-3,60% 1,18%

11,40%

0,99%

11,10%

0,40% -4,40%

SA Sector Employment Growth Adcorp Sector Exposure

0,00%

Average for SA economy: -0,09%Adcorp weighted average exposure: +1,15%

ADCORP SALES SECTOR EXPOSURE VS SA SECTOR EMPLOYMENT GROWTH

As can be seen, the Group has limited exposure to sectors such asmining and agriculture where employment trends have beenparticularly negative but is well disposed to sectors such asCommunity (Public Sector) and Personal Services as well asTransport and Communication where employment trends remainrelatively buoyant.

The Group also derives a high proportion of its revenues from themanufacturing sector which, although particular areas within themanufacturing sector are in decline, Adcorp has limited exposure tothe weaker areas such as the manufacture of non-ferrous metals,petrochemicals and the automotive sector.

The Group’s ability to outperform the average employment trends of

the economy are therefore largely related to the selective industry

exposure the Group operations have, the defensive nature of the

dominant blue-collar operations which tend to demonstrate an

element of counter-cyclicality in tough economic times as businesses

seek to build flexibility into their cost and overhead structures

through the use of contract labour, the market-leading position the

Group enjoys, which generally provides for access to a better

quality of business, proactive management in terms of driving

internal efficiencies and the quality acquisitions the Group has

recently made.


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Whilst the expectation is that the economic cycle is unlikely torecover any time soon, this relatively defensive positioning of theGroup should stand it in good stead to deal with these adverseeconomic conditions and to outperform the general economy.

Recently, the South African Government announced an initiative tocreate 500 000 public works programme jobs in an attempt toalleviate unemployment with a view to expanding this number by upto four million additional jobs by 2014.

Whilst the initiative is initially focused oncreating temporary public works assignments, the

objective is to ultimately transition these posts intopermanent positions.

These initiatives will require specialised recruitment and assessmentinterventions, substantial skills development and training as well aspayrolling and supervision which Adcorp could play a substantialrole in if so required.

What is most encouraging about these initiatives is that itdemonstrates a continued commitment by Government to jobcreation and skills development, which should positively impact theoperations of the Adcorp Group in the medium to long-term.

In this regard, Adcorp is currently a major initiator of learnerships interms of the Skills Development Act.

INDUSTRY DEVELOPMENTSThere has been much public debate recently, emanating principally

from the trade union movement, with regard to the prospect of

further regulation governing the a-typical, contract labour or

temporary employment services (TES) market.

The debate has primarily focused on the need to eradicate certain

exploitative labour-broking practices carried on by various

operatives within the industry as well as the entrenchment of the

principle of “decent work” as defined by the International Labour

Organisation (ILO).

According to the International Labour Organisation, “decent work”

involves creating opportunities for work that is productive and

delivers a fair income, security in the workplace and social

protection for families, better prospects for personal development

and social integration, freedom for people to express their concerns,

organise and participate in the decisions that affect their lives and

equality of opportunity and treatment for all women and men.

Adcorp has taken an active role in these deliberations and is

generally supportive of certain of the recommendations which, if

dealt with appropriately, could be positive for the staffing industry as

a whole.

The staffing industry plays a leading role in the South African

economy in terms of job creation by way of introducing a significant

number of first-time job seekers into the formal job market as well

as by playing a leading role in the upskilling of thousands of

employees through the formal learnership process.

Whilst the debate relating to this issue has spilled into the public

domain, there have been many positive aspects to this in that it has

enabled the industry as represented by the Confederation of

Associations in the Private Employment Sector (CAPES) to

showcase the positive role it plays in terms of facilitating job

creation and skills development in the South African environment

and has also substantially elevated the profile of Adcorp which has

taken a leading role in forging opinion around this issue.

ACQUISITIONSAs previously reported to shareholders, the acquisition of Staff-U-

Need became unconditional in August 2008. Given the specific focus

of the business providing skilled and semi-skilled workers to the

power-generation and engineering industries, it is expected to be an

important contributor to the Group in the future. The business has

integrated well into the Adcorp Group and is performing in line with

expectations.

Other relatively recent acquisitions of the past two years, namely

Capital Outsourcing Group and FMS Marketing Solutions, are

performing well and according to expectations. Employ-Rite, which

focuses on the automotive industry, had a difficult year due to the

severe downturn in that industry. The impact of this on the Group

was, however, limited due to its relatively small contribution to

Group profits.

NORMALISED EARNINGSThe financial figures presented for the year ended 28 February 2009

have been significantly impacted by certain non-cash and mostly

non-recurring adjustments required in compliance with International

Financial Reporting Standards (IFRS). These adjustments are

substantial and grossly misrepresent the true commercial and

economic reality of the Group’s trading performance for the period

under review.


Chief Executive’s report (continued)

The impact of these adjustments on HEPS (headline earnings per share) is as follows:

Year to Year to

Feb 2009 Feb 2008

R’000 R’000

Impact of IFRS – non-cash flow items

Amortisation of intangible assets (55 234) (42 864)

Share-based payments (18 316) (100 966)

Imputed interest charge (4 282)

Lease smoothing (374) (1 315)

Profit on disposal of part of continuing operations – 48 236

Tax effects on above 15 409 13 382

IMPACT ON HEADLINE EARNINGS (62 797) (83 527)

Impairments – (6 645)

Loss on disposal of discontinued operations – (8 132)

IMPACT ON ALL EARNINGS (62 797) (98 304)

Impact on HEPS (cents) (118,9) (167,5)

Impact on EPS (cents) (118,9) (197,1)

% impact on HEPS (30%) (50%)

Excluding the impact of these IFRS adjustments, the normalised, abridged income statement for the year ended 28 February 2009 is as follows:

Year to Year to

Feb 2009 Feb 2008 %

Normalised abridged income statement for the year ended 28 February 2009 R’000 R’000 Change

REVENUE 4 837 123 3 938 881 23

Cost of sales (3 724 735) (2 986 575) 25

GROSS PROFIT 1 112 388 952 306 17

Other income 32 695 27 699 18

Admin, marketing and operating expenses (844 557) (746 041) 13

OPERATING PROFIT 300 526 233 964 28

Net interest paid (28 850) (19 331) 49

Share of profits from associates 18 875

Profit before taxation 271 694 215 508 26

Taxation (65 304) (48 963) 33

PROFIT FOR THE YEAR 206 390 166 545 24

Weighted average shares (000’s) 52 808 49 868

Diluted weighted average shares (000’s) 53 000 50 869

Core headline earnings per share 390,8 334,0 17

Diluted core headline earnings per share 389,4 327,4 19


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ERP SYSTEM IMPLEMENTATIONThe implementation of the new Microsoft Dynamics AX ERP

system has been successful with the majority of Group companies

having now gone live on the system. The system will contribute

positively to the quality, extent and relevance of management

information as well as to operating efficiencies.

HUMAN RESOURCESBeing a people-intensive business, the need for sound human

resource policies and procedures is of paramount importance.

The key focus of this function is around the attraction and retention

of top talent in the Group.

In this regard, the Group remains committed to upholding a best

practice human resource management approach ensuring that the

management of human resources is effective, efficient and that there

is fair treatment of all employees.

In terms of this best practice approach, particular emphasis is given

to the following areas:

• Recruitment practices;

• Retention policies and programmes;

• Succession planning;

• Performance management;

• Training and development;

• Employment equity and affirmative action; and

• Labour relations.

In addition, the Group human resources function is the custodian of

the Group’s social investment activities which are primarily focused

on the development of human potential by way of extending a

bursary scheme to disadvantaged individuals and communities as

well as on the support of vegetable garden projects in disadvantaged

communities.

OUTLOOKThe extent and duration of the recent, extreme turbulence in the

world’s major economies and its likely impact on the South African

economy remain unclear.

The strategy of the Group during these uncertain times is to protect

top-line business as far as possible, realise the full potential of a

number of promising internal productivity and efficiency initiatives,

focus on cash generation, retain our top people talent, positively

influence industry regulation and seek out quality acquisitions.

Despite a troubled global and local economic outlook for the

foreseeable future, certain mitigating factors should position the Group

relatively well to weather the storm.

The defensive nature of the Group portfolio with its overweight

exposure to blue-collar flexible staffing, the sizeable ongoing

infrastructural spend in the country which consumes these workers,

the persistent skills shortage, internal productivity projects and

certain potentially lucrative market opportunities should all combine

to stand the Adcorp Group in relatively good stead.

In addition, these conditions provide a unique opportunity to build a

more robust, sustainable, market leading and dominant business

model positioned advantageously for an economic upswing.

APPRECIATIONAs Adcorp’s strength has always been its outstanding people,

I would like to thank the directors, management and staff of the

Adcorp Group for their valued contribution over the past financial

period and look forward to their continued support in the future.

RL PikeChief Executive Officer


“The Adcorp Group views its role as more critical than ever in terms of introducing new entrants into the formal

job market as well as in terms of the significant role it plays in skills development”.

Dr F Van Zyl SlabbertChairman

“Despite tougher overall trading conditions, the Adcorp Grouponce again produced a solid financial performance for the

year ended 28 February 2009”.Richard Pike

Chief Executive Officer


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Corporate governance

The Adcorp Board believes that strong corporategovernance is essential to ensuring the confidence ofinvestors in the sustainability of the Group.


Board of directors

DR VAN ZYL SLABBERT (68)ChairmanNon-Executive DirectorMA, DPhilAppointed 16 September 1994

Outside directorships held

CTP Caxton – ChairmanFirstRand – DirectorHollard Foundation – Chairman

Van Zyl graduated from Stellenbosch University.He lectured at Stellenbosch, Rhodes, UCT andWits from 1964 to 1974. From 1974 to 1986 hewas a member of Parliament and leader ofthe opposition party. In 1986 he formed IDASAwith A Boraine to promote internal/externaldialogue. Van Zyl received honorary doctoratesfrom Simon Fraser University in Vancouver,Canada, University of Natal and University ofFree State. He is currently involved with Sorosphilanthropy in Southern Africa and nineSADC countries. Van Zyl was recently electedChancellor of the University of Stellenbosch.

RICHARD PIKE (47)Chief Executive OfficerExecutive DirectorBCom (Hons), CA(SA)Appointed 18 October 2000

No outside directorships held

After completing articles at Deloitte Haskins &Sells, he joined the Hunt Leuchars & HepburnGroup as Group Financial Manager, later beingappointed as Financial Director of HL&H MiningTimber. In 1995 he co-founded Morgan UniversityAlliance, a private education and businessconsulting initiative offering degree and diplomaprogrammes in business management from theUniversity of Warwick in the UK. In 1999, he listedAcumen Holdings Limited, a staffing and traininggroup of companies. Acumen was acquired byAdcorp Holdings Limited in the year 2000 whenRichard assumed the position of Deputy ChiefExecutive Officer. In 2001 he was appointed asChief Executive Officer of Adcorp HoldingsLimited.

CAMPBELL BOMELA (59)Executive Director – Group ServicesBCom, MBAAppointed as a Non-Executive Director 11 March 2004Appointed as an Executive Director 1 March 2006


Matlapeng Resources – Non-Executive DirectorMasana Employee Share Trust

Campbell Bomela was the MD ofBlack Management Forum InvestmentsCompany (BMFI) until he joined Adcorpon 1 March 2006. He has been a senior businessprofessional for over 15 years and as part of hisexperience, he was seconded to start up theDepartment of Economic Affairs for the EasternCape Government after the 1994 general elections.Later he was seconded to assist with theamalgamation and rationalisation of the differenteconomic development corporations whichoperated in the Eastern Cape prior to 1994. Oncompletion, he started and ran his own businessesin this area.

FAUNCE BURD (61)Chief Financial DirectorExecutive DirectorAppointed 9 September 2002


Faunce first joined the Adcorp Group in 1990 inthe capacity of Managing Director of AdcorpGraphics. She then left the Group in 1991 to takeup the position of Financial Director of MonoPumps (part of Murray & Roberts) for a period offive years. Faunce rejoined Adcorp in 1997,heading up the subsidiary Adcorp ManagementServices and was later appointed as ChiefFinancial Director of Adcorp Holdings Limited.

NELIS SWART (47)Chief Operations OfficerExecutive Director MComAppointed 9 September 2002


Dreamworld Investments – Director Magnolia Ridge Properties 360 – DirectorCilente Property Investments

Nelis lectured on the subjects of Strategic andFinancial Management at the University ofPretoria. During the same period he was also a co-founder of a consulting and marketing researchcompany. Thereafter he was involved withDeloitte & Touche and Byrne Fleming in amanagement consulting capacity during whichperiod he gained significant consultingexperience in a variety of industries. Prior to hisappointment as Managing Director of QuestFlexible Staffing Solutions, he was thecommercial director of Beier Industries inKwaZulu-Natal.

RESIGNATIONSG Duda – 7 November 2008P Ward – 2 March 2009

APPOINTMENTSG Duda – 10 March 2009A Alback – 14 April 2009


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LOUISA MOJELA (52)Non-Executive DirectorBComAppointed 1 June 2007


Wiphold, Distell Group, Sun International, ABB SA, African People Industrial Corporation,Afrisun Gauteng, Afrisun Leisure, EmfuleniResorts, National Casino Resort Manco,Phaphama Holdings, SA Corporate Real EstateFund Manager Limited, Skyprops 142, SA Airways, USB-ED Limited, WipholdFinancial Services No. 1 Limited, WIPInvestments and WIP Three Investments.

Louisa is one of the founders and Group CEO ofWomen Investment Portfolio Holdings Limited(Wiphold). Louisa has held positions at StandardCorporate and Merchant Bank (SCMB), TheDevelopment Bank of Southern Africa (duringwhich time she was seconded to the World Bankin Washington DC), and the Lesotho NationalDevelopment Corporation. Louisa has completedan Executive Leadership Programme at WhartonSchool of Business at the University ofPennsylvania. In 2000 Louisa was selected as oneof the 40 women from different continents andcountries as “The Leading Women Entrepreneurof the World”.

TRYPHOSA RAMANO (37)Non-Executive Director BCom, CA(SA)Appointed 1 June 2007


Sasria, Women Investment Portfolio Holdings,Afrisun Leisure, Emfuleni Resorts, LegaeSecurities, USB Executive Development, DBSA,FSB of SA, Old Mutual Investment GroupProperty Investments, Real African Holdings andAfrican Women Chartered Accountant.

Prior to joining Wiphold in November 2006,Tryphosa was the Chief Financial Officer andExecutive Vice-President of SAA and has actedas President of SAA. She previously headed theAsset and Liability Division of the NationalTreasury where her focus was on the restructuringof state-owned assets, ensuring legislativecompliance by public entities and monitoring

contingent liabilities of government. Tryphosawas instrumental in the listing of Telkom on theJSE and NYSE and enforcing the payment of R10 billion in dividends by public entities togovernment. Before joining government,Tryphosa was a portfolio manager and Head ofthe Institute of Excellence at RMB AssetManagement.

GUGU PRIDE DUDA (32)Alternate DirectorBCom, CA(SA)Appointed 1 June 2007


ABB South Africa and ABB Powertech.

Gugu recently joined Wipcapital as part of theInfrastructure Finance team. Prior to joiningWipcapital, she was Chief Financial Officer forInternet and Telephone Banking division at FNB.Her prior experience includes positions infinance, credit and risk at RMB and FirstRand.

AMANDA ALBACK (35)Non-Executive Independent DirectorBCom (Hons), CA(SA)Appointed 14 April 2009


Amanda is a Chartered Accountant andcompleted her BCompt and BCompt Honoursthrough Unisa and her articles with KPMG andBetty and Dickson Chartered Accountants.Amanda then studied for a Specialist Diploma inAuditing at RAU. She joined SAA as a SeniorManager – Passenger Revenue Accounting for aperiod of two years. Amanda then moved toVodacom Service Provider as Executive Head –Financial Management before being offered alateral transfer to her present position with theVodacom Group as Executive Head of FinancialControl. She is a Trustee of the Vodacom Pensionand Provident Funds, and Chairs the Funds’Auditand Risk Committee.

She will be joining Spescom Limited as ChiefFinancial Officer, effective 1 August 2009.

Amanda is a member of SAICA, IRBA and theManagement Board of African Women CAForum responsible for the Marketing andBursaries Portfolio.

MUTHANYI ROBINSON RAMAITE (39)Non-Executive DirectorMaster’s degree in Public DevelopmentManagement, B.Luris, University of the NorthAppointed 1 June 2007


Simeka Group, Vusani Property Investments,Khullela, Verge Management Services, Fintech,Gobodo Forensic & Investigative Accounting,Majestic Silver Trading, Newshelf 669, GoldenPond Trading 350, MRR Management, RamaiteBrothers Family Trust, Ramaite Properties, SimekaBSG, Simeka Management Services, SimekaProperties, Wescoal Holdings and CarbonReductions SA.

Robinson studied at the University of theWitwatersrand and graduated with a master’sdegree in Public and Development Management.He then obtained a B.Luris at the University ofthe North.

Through his directorships and interest in thedifferent areas of business, Robinson has beeninvolved in a number of investment initiatives inthe property, mining, aviation and ICT sectors, tomention a few. He has also made valuablecontributions in various transformation andempowerment initiatives.

In his term of office as Director-General for theDepartment of Public Service and Administration(1999 to 2003) he served in various positionsincluding Chairperson of the Directors-GeneralGovernance and Administration cluster ofgovernment, Board member of the StateInformation Technology Agency (SITA) and theCentre for Public Service Innovation (CPSI).


Corporate governance

COMPLIANCE WITH THE CODE OF CORPORATE PRACTICESAND CONDUCTThe board of directors is fully committed to effective corporate

governance and the need for integrity and high ethical standards in

the conduct of its business. Adcorp fully supports the Code of

Corporate Practices and Conduct and endorses the need to conduct

its business in accordance with the highest standards of corporate

practice. The directors have applied the recommendations as

contained in the Code of Corporate Practices and Conduct set out in

the King II report. King III recommendations are in the process of

being implemented.

BOARD OF DIRECTORSThe board of directors as set out on pages 24 and 25 of the annual

report consists of four executive directors and five non-executive

directors of which one is independent. It is planned to appoint one

additional independent non-executive member to the board in the

near future. There is one black alternate director. The non-executive

directors provide the board with independent judgement based on

their significant range of skills and commercial experience.

Five board members are black and four are women. The functions of

Chairman and CEO are not performed by the same person.

The board meets quarterly and on an ad hoc basis if considered

necessary. The main function of the board is to determine strategy

and direction and to lead the Group in this direction with integrity

and judgement. In addition, it is responsible for the overall

sustainability of the Group including areas such as risk management,

protection of Group assets, monitoring key performance indicators

as well as the adequacy of policies and systems. It is further required

to ensure compliance with all legal and statutory requirements.

Certain functions have been delegated to subcommittees,

which currently consist of the audit and risk committee,

transformation committee and the remuneration and nominations

committee. The functions of these committees are described more

fully under each of the relevant subheadings in this report.

All new directors are given a presentation on the Group’s strategy as

well as a document outlining the duties and responsibilities of

directors. Presentations covering director responsibilities and

fiduciary duties are also arranged for board directors from time

to time.

Executive directors do not have service contracts, and employment

is subject to a maximum of three months’ notice with the exception

of the CEO where the notice period is six months. Restraint

agreements have been signed and all executive directors hold either

shares or share options or both.

A declaration of interests is submitted by all directors annually in

order to determine any conflict of interests. One conflict of interest

exists at present but this has been debated and approved by the board.

All board directors have access to the advice of the company

secretary and are at liberty to obtain external advice at the company’s

cost if necessary.

P Ward resigned from the board on 2 March 2009 and A Alback was

appointed on 14 April 2009.

BOARD MEETINGSBoard meetings were held quarterly during the year under review.

Below is a schedule setting out the attendance at the meetings by the

board members.

Possible Attended

Van Zyl Slabbert (Chairman) 4 3

C Bomela 4 4

FD Burd 4 4

GP Duda (alternate) 4 1

LM Mojela 4 2

RL Pike 4 4

MR Ramaite 4 3

T Ramano 4 4

PC Swart 4 4

PK Ward 4 4

For details of directors refer to pages 24 and 25.

The Group places significant importance on the useof empowered suppliers and sourcing of services

and supplies from empowered companies is encouraged and monitored.


AUDIT AND RISK COMMITTEEFour meetings were held during the financial year and attendance is

detailed below:

Possible Attended

P Ward (Chairman) Independent

Appointed: 1 June 2007 Non-Executive 4 4

Resigned: 2 March 2009

Dr F Van Zyl Slabbert Non-Executive 4 3

Appointed: 9 May 2006

T Ramano Non-Executive 4 4


(Acting chairman with

effect from 4 May 2009)

A Alback Independent

Appointed: 14 April 2009 Non-Executive n/a n/a

F Burd Chief Financial

Director

(by invitation) 4 4

R Pike Chief Executive

Officer

(by invitation) 2 2

P Bierman Executive

(by invitation) 4 4

R Tayob Executive

(by invitation) 4 4

Sizwe Ntsaluba vsp Internal auditors 4 4

Deloitte & Touche External auditors 4 4

A Alback was appointed to the audit and risk committee with

effect from 14 April 2009 and P Ward resigned with effect from

2 March 2009.

Executive management together with both the external and internal

auditors are in attendance at each meeting. Other members of staff

attend as required. Executive attendees are not present during

periodic discussions on executive openness, cooperation and

effectiveness.

The Group’s updated audit and risk committee charter was ratified

by the board during the course of the financial period and complies

with the Companies Act Amendment 2006. It is currently being

further amended to allow for the early adoption of the

recommendations contained in King III.

The committee’s main responsibility is to provide the board with

additional assurance regarding the integrity and effectiveness of the

Group’s risk management framework and related internal controls,

reporting and compliance systems applied within the Group and the

operational implementation of corporate governance. Other duties

include a review of the accounting policies, a recommendation to the

board for the approval of the financial statements, a review of

information systems and the review of the level and competency of

financial management.

The Group’s risk management framework has been completed and

major risks identified. A formal response to mitigate these risks is in

progress.

As required by the JSE, the company has appointed a Chief Financial

Director. The position is currently held by FD Burd who is an

executive director on the board of Adcorp and is deemed competent

by the audit committee.

The external auditors have confirmed their independence and the

audit committee is satisfied that the audit has been carried

out by independent auditors, free of any scope restrictions.

The directors are satisfied that the audit committee has carried out

its designated function as required by the Code of Corporate Practice

and the Amendment to the Companies Act of 2006 and as mandated

by the board.

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The board of directors is fully committed toeffective corporate governance and the need

for integrity and high ethical standards in theconduct of its business.


Corporate governance (continued)

TRANSFORMATION COMMITTEEThe transformation committee was established in 2004 and consists

of the members listed below. Two meetings were held and attendance

was as follows:

Possible Attended

R Ramaite (Chairman) Non-Executive 2 1


G Duda Non-Executive 2 2

D Marsden Non-Executive 2 1

C Bomela Executive 2 2

A Ramsden Executive

(by invitation) 2 1

W Smith Executive

(by invitation) 2 2

J Boonzaaier Executive

(by invitation) 2 2

Transformation is an ongoing Group focus and is discussed at

all Adcorp board meetings as well as at all executive committee

meetings.

The transformation committee is responsible for monitoring

transformation at all levels within the Group as well as assisting with

formulation of Group transformation policy and reviewing the

implementation of these policies. In addition, the committee reviews

progress on employment equity and skills development as well as

corporate social investment. Adcorp has recently been awarded first

place overall in the Financial Mail/Empowerdex Top Empowerment

Companies Survey 2009 for the second year in a row.

REMUNERATION AND NOMINATIONS COMMITTEEThis committee met once during the year and consists of the

following:

Possible Attended

R Ramaite (Chairman) Non-Executive 1 1

Appointed: 5 March 2008

Dr F Van Zyl Slabbert Non-Executive 1 1

F Burd

(Group Financial Director) 1 1

R Pike

(Chief Executive Officer) 1 1

The remuneration committee is responsible for approving theremuneration of all board directors as well as the allocation of shareoptions to employees. The committee is also responsible forreviewing senior management salary increases and bonuses.Independent external consultants and market comparisons are used to ensure that remuneration is market related and islinked to both individual and company performance. Directors’remuneration is fully disclosed on page 74.

EXECUTIVE COMMITTEEThe Adcorp executive committee is the most senior executivedecision-making body in the Group. The committee is chaired by theChief Executive Officer and comprises the Chief Financial Director,the Chief Operations Officer and the Executive Director – GroupServices.

The executive committee is responsible for inter alia the following:• Strategic planning and direction, monitoring of market trends and

competitive activity.• Structuring of the Group’s portfolio of assets.• Shaping and approving operational strategies, budgets and

forecasts.• Measuring, monitoring and taking proactive action on company

performances.• Monitoring and managing cash, cash collections and margins.• Shaping and approving succession plans and senior management

appointments.• Group BEE structures, initiatives and transformation.• Group reporting and reporting to shareholders.

INTERNAL CONTROLThe directors report that the company’s internal controls and systemsare designed to provide reasonable assurance as to the integrity andreliability of the financial statements and to adequately safeguard,verify and maintain accountability of its assets. Such controls arebased on established written policies and procedures and are imple-mented by trained personnel with an appropriate segregation of duties.These policies and procedures are reviewed continually and updated asnecessary. The internal audit division conducts ongoing audits on allGroup companies and written reports are compiled. All items raisedin these reports are addressed promptly. The audit and risk committeeevaluates internal and external risks to the businesses and matters ofconcern are addressed on an ongoing basis by management. TheGroup has a documented and tested business continuity plan whichshould enable it to recover from a disastrous incident. Nothing hascome to the attention of the directors to indicate that any materialbreakdown in the functioning of these controls, proceduresand systems has occurred during the year under review.


GOING CONCERNThe directors are of the opinion that the business will be a goingconcern for the foreseeable future and, accordingly, the financialstatements have been prepared on the going-concern basis.

SOCIAL INVESTMENTAdcorp established a formal Social Investment Programme inJanuary 2001. The achievements of this programme as well as itspurpose and future direction are covered more fully under the sectionon “Corporate social investment” on page 31.

NON-FINANCIAL MATTERSAll directors and employees are required to maintain the highestethical standards in ensuring that the Group’s business practices areconducted in a manner which in all reasonable circumstances isbeyond reproach. There is a documented code of conduct which issigned by all employees.

Adcorp is committed to educating and supporting employees in thefight against HIV/Aids and will be launching an employee wellnessproduct later this year which includes an HIV helpline.

Adcorp is concerned about employees’ safety and all reasonablesteps are taken to ensure their safety.

Adcorp is environmentally responsible and aware and ensures that atall times the Group in no way negatively impacts the environment.

STAKEHOLDER COMMUNICATIONThe board strives to present a balanced and understandableassessment of the Group’s position, addressing material matters ofsignificant interest and concern to stakeholders. At all times, abalance is sought in presenting the positive and negative aspects ofactivities of the Group.

The Group reports under International Financial ReportingStandards (“IFRS”) and, accordingly, the results for the period ended28 February 2009 have been prepared in accordance with theGroup’s accounting policies, which comply with IFRS. Details of theGroup’s accounting policies are set out more fully in the financialstatements.

YEAR-ENDAs previously advised, Adcorp changed its year-end from Decemberto February. In order to facilitate this, the initial reporting periodcovered a 14-month period being 1 January 2007 to 29 February2008. The Group is now back on a 12-month reporting cycle with thecurrent reporting period being 1 March 2008 to 28 February 2009.

USE OF EMPOWERED SUPPLIERSThe Group places significant importance on the use of empowered

suppliers and sourcing of services, and supplies from empowered

companies is encouraged and monitored.

CLOSED TRADING PERIODDirectors and managerial staff are precluded from trading in Adcorp

shares from end February until the announcement of the annual

results and again from 31 August until the announcement of the

interim results.

HUMAN RESOURCESThe board of directors has formalised a transformation programme

whereby measurable objectives for the Adcorp Group have been set

in four areas:

• best practices in human resources;

• affirmative action;

• organisational culture; and

• black economic empowerment.

The transformation framework has followed the strategic business

plan of the Group and its operating companies and divisions and is

focused primarily on building capacity through focused development

and skills transfer.

This is aimed at achieving sustained growth and profitability

both now and in the future. In order to achieve strategic

business objectives, the above transformation process is supported

with a performance measurement system focused on measuring

key objectives at all levels throughout the Group. The system

facilitates effective planning, implementation and monitoring at

board level and reflects the individual and collective commitment of

all directors and senior managers to the process. A table setting out

the number of employees and the employment equity status of

the Group appears on page 30. In addition to 2 440 permanent

employees, the Group has 70 000 to 75 000 contract and temporary

employees on assignment at any one time. These temporary

employees are placed in employment across a wide spectrum

of businesses. Adcorp has a significant number of learnership

contracts which also form part of the Group’s training initiatives

and contributes significantly to the process of upskilling the

country’s workforce. In addition, temporary contracts are a major

conduit to permanent employment. Altogether 85% of temporary

employees are black and of this number 50% have never been

previously employed.

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Employment equity – permanent staff

2008 2007R’000 R’000

Total workforce 2 405 1 755Total employees with disabilities 20 18

Workforce profileRace and gender profileNon-designated Group (includes foreign nationals) 263 180White females 704 618Black males 508 274Black females 930 683

Occupational level profileManagement (top, senior, middle and junior) 1 325 1 195Non-management 1 080 560

Management profile by gender (top management, senior management, middle management, junior management)Females 960 945Males 365 250

Management profile by raceBlack 610 535White (includes foreign nationals) 715 660

Non-management profile by genderFemales 702 379Males 378 181

Non-management profile by raceBlack 828 422White (includes foreign nationals) 252 138

Disability profileManagement 11 9Non-management 9 9

People with disabilities by genderFemales 10 8Males 10 10

Total employees before reporting cycle 1 755 1 810

Add: Recruits (including intake of Capital Outsourcing Group) 1 775 1 441Less: Resignations (11) (103)(Project staff) Non-renewal of contracts (contract employees) (594) (1 022)

Dismissals (2) (10)Retirements (included in other) – –

(Disposal of Career Junction, Knovation) Other (469) (348)Retrenchments (14) (13)

2 440 1 755

* The skills development reporting period runs from 1 April 2007 to 31 March 2008 and the equity reporting period has been alignedto this.

for the 12 months ended 31 March 2008*


Corporate social investment

Adcorp’s corporate social investment (CSI) initiatives have evolved

over the years and are currently focused mainly in the areas of

vegetable garden projects, bursaries, scholarships and educational

institution support as well as the support of certain special cause

projects including the sponsorship of medical costs for a young

cancer patient and the provision of a motorised wheelchair for a

severely handicapped individual. Adcorp annually commits an

amount in excess of 1% of its annual profits to CSI projects.

VEGETABLE GARDEN PROJECTSThe Adcorp Group has for many years supported a number of

community-based vegetable garden projects which have been the

flagship of the Group’s corporate social investment programme.

There are currently 13 such sponsored all-weather, hydroponic

tunnels which ensure continuous year-round vegetable production

as well as a number of larger, adjacent shade netting and

fenced-in areas.

These vegetable garden projects, which cover some 11 700 m2 of

arable area, are situated in Gauteng, the Western Cape and

KwaZulu-Natal.

The latest such Adcorp project to be launched was the Tshedimosho

vegetable garden in Soweto which recently won two prestigious

awards, namely the Gauteng Province’s Best Household Producer of

the Year Award and the Nestlé Community Nutrition Award for 2008.

The gardens provide unskilled, unemployed people, especially

women and children in disadvantaged communities, with the basic

know-how for growing vegetables whilst providing them with the

opportunity to earn a living.

Vegetables propagated through these schemes are typically sold to

the surrounding communities and hawkers whilst some of the fresh

produce is also donated to children’s homes and hospices.

Each project is provided with the necessary start-up finance for

infrastructure, equipment, seed, fertilisers and training. Project

participants are also provided with the necessary support and

mentorship for an initial 18-month period to ensure that these

projects become self-sustaining and to ensure appropriate skills

transfer to the beneficiaries, after which the projects typically make

the transition to autonomously run operations with Adcorp providing

ad hoc support where necessary.

BURSARIES/SCHOLARSHIPSAdcorp introduced a bursary programme in 2007 supporting six

learners from the Nourivier area of the Northern Cape province. This

year, the Adcorp Bursary Programme, targeting learners in grades

7 to 12, has been expanded to other provinces.

A total of 36 such bursaries have been awarded to learners from the

Western Cape, KwaZulu-Natal and Gauteng. The value of the

individual bursaries range from R5 000 to R20 000 per annum per

learner and are granted for an initial one-year period renewable

each year dependent on academic achievement. The bursaries cover

tuition, accommodation, as well as sporting and academic

excursions.

CHRISTMAS WISH LISTAdcorp recently responded to the 94.7 Highveld Stereo 2008

Christmas Wish-List appeal whereby the urgent need was identified

for a sponsor to assist in covering the medical expenses of a young

child born with a malignant tumour in his left eye requiring

chemotherapy and extensive surgery. Adcorp responded to the

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Corporate social investment (continued)

appeal offering a full sponsorship of these medical costs.

Unfortunately, the young patient, Baby Declan, has since

passed away.

WHEELCHAIR DONATIONThe latest beneficiary of Adcorp’s Corporate Social Investmentprogramme is Pretoria-based quadriplegic, Joshua Rashopola, whowas recently presented with a high-tech fully motorised wheelchairby Adcorp.

Joshua’s dreams of becoming a chartered accountant were dashed in2000 when he was involved in a serious motor accident that robbedhim of the use of his arms and legs. At that time he had much to lookforward to. He was working for an accounting company, had a steadygirlfriend and drove his own car.

For the past nine years he has been predominantly housebound andforced to make do with an aged, manual wheelchair which hasrendered him highly dependent on family and friends.

The new self-propelled wheelchair has allowed Joshua to become farmore independent and to again earn a steady income. He has plans toprovide a home-based accounting service focusing on smallbusinesses.

OTHER PROJECTSA number of Adcorp subsidiary companies also participate in social

upliftment projects, such as Emmanuels Advance, which provides

financial support to the Eldorado Park and Lenasia Life Colleges,

Capacity which supports one of the Group vegetable garden projects

in Tembisa as well as supporting a disadvantaged crèche in Richards

Bay, whilst Premier Personnel supports a brick-making project in

Limpopo province.


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Financial statements

The Adcorp Group produced a solid financial performance for the year ended 28 February 2009, despite tougher overall trading conditions


Six-year review

IFRS* SA GAAP*2009 2008** 2006 2005 2004 2003

INCOME STATEMENTRevenue (R’000) 4 837 123 4 430 105 2 700 216 2 359 652 1 980 116 1 667 235Operating profit before IFRS adjustments, depreciation and amortisation (R’000) 326 048 284 499 149 603 131 655 99 323 85 735Operating profit including discontinued operations (R’000) 226 602 108 723 125 165 116 407 85 493 67 942Profit/(loss) before taxation (R’000) 194 155 168 171 136 460 102 139 78 465 17 016Effective tax rate (%) 19,5 18,3 23,5 30,5 23,0 39,2Profit/(loss) for the period (R’000) 144 073 126 968 105 620 67 129 59 333 (9 089)Core headline earnings (R’000) 206 390 183 080 108 077 65 185 56 917 (8 802)

BALANCE SHEETFixed and other non-current assets (R’000) 845 422 675 449 138 372 119 723 141 541 132 791Current assets (R’000) 868 178 714 485 511 496 438 307 349 035 294 081

Total assets (R’000) 1 713 600 1 389 934 649 868 558 030 490 576 426 872

Ordinary shareholders’ interest (R’000) 803 481 667 750 310 703 249 706 215 945 186 707Minority and BEE shareholders’ interest (R’000) 421 421 82 2 456 3 070 788Interest and non-interest-bearing non-current liabilities (R’000) 214 620 156 694 1 586 5 541 6 887 – Deferred taxation (R’000) 35 050 38 540 3 424 1 777 – – Current liabilities (R’000) 660 028 526 529 334 073 298 550 264 674 239 377

Total equity and liabilities (R’000) 1 713 600 1 389 934 649 868 558 030 490 576 426 872

PROFITABILITYReturn on assets managed (%) 43,9 42,0 32,0 33,4 30,7 29,6Return on equity (%) 19,6 22,2 37,5 28,5 29,2 (4,5)Return on sales (operating margin) (%) 6,2 5,8 4,9 4,9 4,3 4,3EBITDA/revenue (%) 6,7 6,4 5,5 5,6 5,0 5,1Number of employees 2 440 1 755 1 810 1 569 1 658 1 611

LIQUIDITYCash generated by operations to operating profit (%) 80,6 101,7 74,9 79,4 102,9 131,9Current ratio 1,3 1,5 1,5 1,5 1,3 1,2Gearing (%) 37,8 30,4 6,0 – 0,6 11,9Debtors days 35 30 36 33 36 38

STATISTICSWeighted average number of shares in issue (’000) 52 808 49 122 42 882 41 730 40 302 40 031Core headline earnings per share (cents) 390,8 372,7 252,0 195,1 158,2 96,4Earnings/(loss) per share (cents) 272,8 258,5 251,8 156,2 141,2 (22,0)Total capital distribution/annual dividend per share (cents) 222 215 168 140 105 64Dividend/capital distribution cover (times) based on core HEPS 1,8 1,7 1,4 1,4 1,5 1,5Net asset value per share (cents) 1 483 1 315 716 592 531 466

* The 2005 to 2009 year results have been prepared in accordance with International Financial Reporting Standards (IFRS). The transition date to IFRS was 1 January 2004 resulting in the 2004figures being restated to reflect IFRS adjustments. The 2003 figures have been prepared in accordance with South African statements of General Accepted Accounting Practice (SA GAAP, whichwas effective at 31 December 2004).

** The 2008 year represents 14 months and not 12 months due to the fact that Adcorp changed its year-end from December to February.


Definitions

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CASH GENERATED BY OPERATING ACTIVITIES TO OPERATING PROFIT Cash generated by operations as a percentage of operating profit.

CORE HEADLINE EARNINGSHeadline earnings excluding non-cash flow IFRS adjustments and profit on disposal of continuing business.

CURRENT RATIOTotal current assets divided by total current liabilities.

DEBTORS DAYSDebtors days are calculated using the peel back method, whereby the trade debtors balance is reduced by monthly sales (including VAT)

until the balance is exhausted.

DIVIDEND/CAPITAL DISTRIBUTION COVERHeadline earnings divided by the annual dividend/capital distribution.

EBITDA/TURNOVEROperating profit before IFRS adjustments, depreciation and amortisation as a percentage of revenue.

EARNINGS PER SHAREProfit attributable to ordinary shareholders, divided by the weighted average number of shares in issue.

GEARINGTotal interest-bearing debt divided by total ordinary shareholders’ interest.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) ADJUSTMENTSIFRS adjustments include non-cash flow items such as share-based payments, amortisation of intangibles and lease smoothing.

NET ASSET VALUE PER SHAREOrdinary shareholders’ interest, divided by the number of shares in issue at the year-end.

RETURN ON ASSETS MANAGEDOperating profit (before goodwill amortisation prior to 2004) divided by the total of property and equipment, trade and other receivables.

RETURN ON EQUITYProfit for the year after IFRS adjustments divided by average equity of shareholders.

RETURN ON SALES (OPERATING MARGIN)Operating profit (before goodwill amortisation prior to 2004) divided by revenue.


Approval of the annual financial statements

TO THE MEMBERS OF ADCORP HOLDINGS LIMITEDThe directors of the company are responsible for the preparation, integrity, objectivity and fair presentation of the annual financial statements and relatedfinancial information presented in this report.

The directors are also responsible for the systems of internal control. These are designed to provide reasonable but not absolute assurance as to the reliabilityof the financial statements, and to adequately safeguard, verify and maintain accountability for assets and to prevent and detect material misstatement and loss.The systems are implemented and monitored by suitably trained personnel with appropriate segregation of authority and duties. Nothing has come to theattention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the periodunder review.

The company and Group financial statements are prepared in accordance with the provisions of the South African Companies Act and comply with InternationalFinancial Reporting Standards and incorporate full and reasonable disclosure in line with the accounting policies of the Group.

The directors are of the opinion that the business will be a going concern for the foreseeable future, and accordingly the financial statements continue to beprepared on the going-concern basis.

It is the responsibility of the independent auditors to report on the annual financial statements. Their response to the members is set out on page 38.

The annual financial statements for the 12-month period ended 28 February 2009 set out on pages 33 to 81 were approved by the board of directors on 15 July 2009 and are signed on its behalf by:

RL Pike FD BurdChief Executive Officer Chief Financial Director

Johannesburg15 July 2009

In accordance with section 268G(d) of the Companies Act, 61 of 1973, as amended, I certify that the company has lodged with the Registrar all such returns asare required by a public company in terms of the Act and that all such returns are true, correct and up to date.

LJ SudburyCompany secretaryAppointed 8 March 2006

Johannesburg15 July 2009

28 Sloane StreetBryanston2021


Certification by company secretary

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Report of the independent auditors

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ADCORP HOLDINGS LIMITEDWe have audited the annual financial statements and Group annual financial statements of Adcorp Holdings Limited, which comprise the directors’ report, thebalance sheet and the consolidated balance sheet as at 28 February 2009, the income statement and the consolidated income statement, the statement of changesin equity and the consolidated statement of changes in equity and cash flow statement and the consolidated cash flow statement for the financial year then ended,a summary of significant accounting policies and other explanatory notes, as set out on pages 39 to 81.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International FinancialReporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes designing, implementing and maintaininginternal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standardson Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether thefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected dependon the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by the directors, aswell as evaluating the overall financial statement presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINIONIn our opinion, the financial statements present fairly, in all material respects, the financial position of the company and of the Group as at 28 February 2009, and of their financial performance and their cash flows for the financial year then ended in accordance with International Financial ReportingStandards and in the manner required by the Companies Act of South Africa.

Deloitte & TouchePer RC Campbell Partner21 July 2009

Registered AuditorsBuildings 1 and 2 Deloitte PlaceThe Woodlands 20 Woodlands DriveWoodmeadSandton2196

National executive: GG Gelink – Chief Executive, AE Swiegers – Chief Operating Officer, GM Pinnock – Audit, DL Kennedy – Tax & Legal and FinancialAdvisory, L Geeringh – Consulting, L Bam – Corporate Finance, CR Beukman – Finance, TJ Brown – Clients & Markets, NT Mtoba – Chairman of the Board.

A full list of partners and directors is available on request.

The directors have pleasure in submitting their report and financial statements for the year ended 28 February 2009.

NATURE OF BUSINESSAdcorp Holdings Limited is an investment holding company whose subsidiaries and associates carry on business, mainly in South Africa, in the permanentrecruitment and flexible staffing sectors as well as business process outsourcing.

OVERVIEWShareholders are reminded, as announced in March 2007, that the company has changed its financial year-end from December to February. As such, the financialresults presented herewith for the previous period are for the 14 months ended 29 February 2008, while the current reporting period is for the year ended 28 February 2009.

IFRS non-cash flow adjustments have significantly impacted the reported results, whilst the change in the reporting period makes comparison difficult. Thetable below sets out the normalised earnings for the year ended 28 February 2009 as well as the comparative figures for the 12 months ended February 2008.

Year to Year to 28 February 29 February

“Normalised” earnings for the 12 months periods as indicated (derived from audited and reviewed results) 2009 2008 %R’000 R’000 change

Revenue 4 837 123 3 938 881 23Cost of sales (3 724 735) (2 986 575) 25

Gross profit 1 112 388 952 306 17Other income 32 695 27 699 18Administrative, marketing, selling and operating expenses (844 557) (745 693) 13

Operating profit 300 526 234 312 28Net interest paid (28 850) (19 331) 49Share of profits from associates 18 875 –

Profit before taxation 271 694 215 856 26Taxation (65 304) (49 311) 32

Profit for the year 206 390 166 545 24

Core headline earnings per share – cents 390,8 334,0 17Diluted core headline earnings per share – cents 389,4 327,4 19

The Adcorp Group once again produced a solid financial performance for the year ended 28 February 2009, despite tougher overall trading conditions.

In this regard, diluted core headline earnings for the year of 389,4 cents per share (2008: 327,4 cents per share) were some 19% ahead of diluted core headlineearnings per share for the comparable prior year.

This result has been achieved due to the relatively strong positioning of the Group with regard to the relevance of its product and service offerings as well asthe efficiency of its operations in relatively challenging economic times.

The strong blue-collar bias of the flexible staffing operations, the ongoing skills shortage, the sustainably differentiating value-adding product and serviceofferings, the blue-chip client base, selective industry exposure, proactive leadership focused on continuous productivity and efficiency improvement initiatives,coupled with certain recent quality acquisitions, have all contributed to a financial performance that has been far more robust than general South Africaneconomic and employment data would suggest.

In this regard, the blue-collar flexible staffing, permanent recruitment and business process outsourcing (BPO) operations of the Group continued to performwell and to deliver strong earnings growth.

The financial performance of the white-collar flexible staffing businesses, however, was negatively affected by sustained volume and margin pressure emanatingprincipally from the retail banking sector. In response, these businesses implemented timely downsizing and cost-cutting initiatives in order to limit the negativeimpact on Group profitability.

The EBITDA margin improved to an average 6,7% compared to the prior year average of 6,5%. This has been achieved by way of a sustained focus onimproving operating margins as well as an improved mix of business, despite the adverse margin impact of the white-collar flexible staffing businesses.

Debtors days outstanding slipped to an average 35 days outstanding compared to the previous year-end level of 30 days outstanding due primarily to latepayment by three large public sector clients which skewed the result. The collectability of these balances is not considered to be at risk but rather is the resultof inefficiencies and processing problems on the client side. Were these debtors to be excluded from the calculation, average debtors days outstanding wouldhave been 32 days, generally indicating a healthy collections pattern within the Group.

As reported to shareholders earlier in the year, the acquisition of Staff-U-Need became unconditional at the end of July 2008. Given the specific focus of thebusiness on the power-generation and engineering industries, it is expected to be an important contributor to the Group in the future. The business has integratedwell into the Adcorp Group and is performing in line with expectations.


Directors’ reportfor the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

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Directors’ report (continued)

for the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

Other relatively recent acquisitions of the past two years, namely Capital Outsourcing Group and FMS Marketing Solutions are performing well and accordingto expectations. Employrite, which focuses on the automotive industry, had a difficult year due to the severe downturn in that industry. The impact of this onthe Group was, however, limited due to its relatively small contribution to Group profits.

The implementation of the new Microsoft Dynamics AX ERP system has been successful with the majority of Group companies having now gone live on thesystem. The system will contribute positively to the quality, extent and relevance of management information as well as to operating efficiencies.

There has been much public debate recently, emanating principally from the trade union movement, with regard to the prospect of further regulation governingthe a-typical or contract labour market.

The debate has primarily focused on the need to eradicate certain exploitative labour broking practices carried on by various operatives within the industry aswell as the entrenchment of the principle of “decent work” as defined by the International Labour Organisation (ILO).

Adcorp has taken an active role in these deliberations and is generally supportive of certain of the recommendations which, if dealt with appropriately, couldbe positive for the staffing industry as a whole.

The industry plays a leading role in the South African economy in terms of job creation by way of introducing a significant number of first-time job-seekersinto the formal job market as well as by playing a leading role in the upskilling of thousands of employees through the formal learnership process.

Given a scarcity of reliable employment data, Adcorp, in conjunction with the Sunday Times, recently initiated the “Adcorp Employment Index” which was firstpublished in March 2009. It is the intention to publish this index on a quarterly basis thus facilitating a better, holistic understanding of the complex SouthAfrican employment environment.

For the second year running the Adcorp Group was recently voted the most empowered company listed on the JSE in terms of the Financial Mail TopEmpowerment Company Survey for 2009. In terms of this survey, Adcorp was the only company ranked as a Level 2 contributor.

FINANCIAL OVERVIEWInternational Financial Reporting Standards (“IFRS”) adjustments have had a significant impact on the figures presented for the year ended February 2009mainly due to the non-cash flow amortisation of intangibles arising from acquisitions made during the past two years. The comparative year ending 29 February2008 has been similarly affected but, in addition, non-cash flow share-based payments arising from the BBBEE deal concluded in May 2007 further impactedthese profits. In order to make the figures comparable, non-cash flow IFRS adjustments have been eliminated in “Normalised core headline earnings” for thecurrent year as well as the prior financial year and period.

For the year ended 28 February 2009 diluted core headline earnings amounted to 389,4 cents per share, which equates to a 19% increase year on year comparedwith 327,4 cents per share for the comparative year. Core headline earnings for the current year were 390,8 cents per share, which is a 17% increase comparedwith the 334,0 cents per share for the prior year. Headline earnings per share at 271,9 cents represents an increase of 63% over the 166,5 cents for the previousyear, however this percentage has been impacted by IFRS adjustments.

The table below sets out the abridged cash flow for the year ended 28 February 2009 as well as the 12-month comparative period.

Audited Unauditedyear ended year ended

28 February 29 February2009 2008R’000 R’000

Cash generated by operations before working capital changes 326 827 257 819 (Increase)/decrease in working capital (84 542) 71 744

Cash generated by operations 242 285 329 563

Net interest paid (28 689) (19 278)Taxation paid (50 713) (57 518)

Free cash generated by operations 162 883 252 767 Net dividend paid (126 637) (91 441)

Cash inflows from operations 36 246 161 326 Cash outflows from investing activities (231 892) (282 706)Cash inflows from financing activities 195 414 150 642

Net (decrease)/increase in cash and cash equivalents (232) 29 262 Net cash and cash equivalents at the beginning of the year/period (50 505) (79 767)

Net cash and cash equivalents at the end of the year/period (50 737) (50 505)

Free cash generated by operations per share – cents 308,4 506,9

The reduction in cash generated by operations of R242,3 million compared with R329,6 million for the prior year was largely due to non-payment by three largepublic sector clients as mentioned above. The resultant cash conversion ratio was 81%. Group borrowings, including the preference share loan, as at 28 February 2009 of R302,1 million compared with R205,2 million for the previous year, resulted in an increase in the Group’s gearing from 31% to 38%.

Staff-U-Need (“SUN”) was acquired with effect from 27 July 2008 and, as previously advised, was funded by a combination of borrowings and shares issued.As at 28 February 2009, R35 million is owing to the SUN vendors and this amount will be paid in September 2009 dependent on certain hurdles being met. In

terms of IAS 34 requirements the profit from this entity included in Group profits for the year ended February 2009 is R21,0 million. This profit has been arrivedat after deduction of the interest attributable to the borrowings required to fund the cash portion of the purchase price as well as the amortisation charges arisingfrom the valuation of the intangible assets acquired. Had SUN been acquired with effect from 1 March 2008 on the same basis as above, the amount of profitthat would have been included in Group profits for the year would have been R23,7 million.

OUTLOOK The extent and duration of the recent, extreme turbulence in the world’s major economies and its likely impact on the South African economy remains unclear.

The strategy of the Group during these uncertain times is to protect top line business as far as possible, realise the full potential of a number of promising internalproductivity and efficiency initiatives, focus on cash generation, retain our top people talent, positively influence industry regulation and seek out qualityacquisitions.

Despite a troubled global and local economic outlook for the foreseeable future, certain mitigating factors should position the Group relatively well to weatherthe storm.

SHARE CAPITALMovements in share capital during the period are shown below:

Number000’s R’000

Opening balance 1 January 2007

Issued shares 43 382 1 085

Acquisitions of subsidiaries (ordinary shares created) 7 009 448 shares at 2,5 cents 7 009 175

Employee share scheme (ordinary shares created) 439 896 shares at 2,5 cents 440 11

Opening balance 1 March 2008

Issued shares 50 831 1 271

Acquisitions of subsidiaries (ordinary shares created) 3 234 571 shares at 2,5 cents 3 235 81

Employee share scheme (ordinary shares created) 152 750 shares at 2,5 cents 153 3

Closing balance 28 February 2009 54 219 1 355

SHARE PREMIUMMovements in share premium during the period are shown below:

2009 2008R’000 R’000

Opening balance 283 070 57 630(2008: 3 200 shares) ordinary shares created at a premium of R3,225 per share – 10– Employee combined option/deferred payment scheme

10 000 (2008: 40 000) ordinary shares created at a premium of R8,825 per share 88 353– Employee combined option/deferred payment scheme

750 ordinary shares created at a premium of R10,3750 per share 8 –– Employee combined option/deferred payment scheme

(2008: 10 611) ordinary shares created at a premium of R11,875 per share – 126– Employee combined option/deferred payment scheme

120 000 (2008: 93 000) ordinary shares created at a premium of R11,975 per share 1 437 1 114– Employee combined option/deferred payment scheme

22 000 (2008: 78 000) ordinary shares created at a premium of R12,975 per share 285 1 0122 790 697 ordinary shares created at a premium of R25,7750 per share to purchase FMS Marketing Solutions – 71 9304 000 000 ordinary shares created at a premium of R35,9750 per share to purchase Capital Outsourcing Group – 143 900218 750 ordinary shares created at a premium of R31,9750 per share to purchase Capital Outsourcing Group – 6 9953 234 571 ordinary shares created at a premium of R30,8250 per share to purchase Staff-U-Need 99 706 –

Closing balance 28 February 2009 384 594 283 070

DIVIDENDOn 6 May 2009, the board declared a dividend of 160 cents (2008: 160 cents) per share which, together with the interim dividend of 62 cents per share, results

in a total distribution in respect of the financial year ending 28 February 2009 of 222 cents per share.

The dividend of 160 cents per share will be paid on 3 August 2009.


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Directors’ report (continued)


STRATEAdcorp dematerialised its issued shares with effect from 9 July 2001 since time settlement of any trade on or outside of the JSE can only be done in electronic

format. All shareholders were circulated with a brochure at the time giving details of how to go about dematerialising their shares. Despite this, a number of

shares remain in certificate format and will have to be dematerialised before they can be traded. Adcorp’s company secretary may be contacted should a

shareholder require advice on the dematerialisation of their share certificates.

ADCORP EMPLOYEE SHARE OPTION SCHEMEThe old Adcorp Employee Share Option Scheme was introduced in 1987 and expanded during 1989 to include a share purchase scheme and again in 1994 to

allow for the creation of a combined option/deferred payment scheme.

Under this scheme options to purchase shares have been granted on 267 244 shares as at 28 February 2009. These options have already vested and may therefore

be paid for and converted into shares at any time at the option of the relevant employees.

Movements for the year in the Adcorp Employee Share Option Scheme appear below:

Opening balance 1 March 2008 Option granted/(cancelled)/(exercised) 2008 Closing balance 28 February 2009Date Quantity

Price Value option Quantity Quantity exer- Price Value Price ValueQuantity (R) (R) granted granted Forfeited cancelled cised (R) (R) Quantity (R) (R)

33 000 6,35 209 550 31/05/03 – – – – 6,35 – 33 000 6,35 209 55020 000 8,85 177 000 31/05/02 – – – (10 000) 8,85 (88 500) 10 000 8,85 88 500

750 10,40 7 800 31/05/98 – – – (750) 10,40 (7 800) – 10,40 – 29 244 11,90 348 004 31/05/01 – – – – 11,90 – 29 244 11,90 348 004

212 000 12,00 2 544 000 31/05/00 – – – (120 000) 12,00 (1 440 000) 92 000 12,00 1 104 000125 000 13,00 1 625 000 31/05/04 – – – (22 000) 13,00 (286 000) 103 000 13,00 1 339 000

419 994 4 911 354 – – – (152 750) (1 822 300) 267 244 3 089 054

NEW ADCORP EMPLOYEE SHARE SCHEMEUnder the new Adcorp Employee Share Scheme eligible employees received conditional allocations of Share Appreciation Rights (SARs). The scheme also

makes provision for the allocation of performance shares (PFs).

The SARs provide employees, at the date the rights vest, with the right to receive shares equal to the appreciation in the share price since grant date. In the event

of the share price decreasing, no value is inherent in the shares and as a result no benefit is due to the employee. The vesting of the shares is subject to various

non-market-related performance criteria. All SARs and PFs expire after six years from grant date.

Movements for the year in the new Adcorp Employee Share Scheme appear below:

The quantities shown below are the number of shares allocated to which the holders are entitled to the appreciation in the share price from grant date to exercise

date. The number of shares that will be exercised to cover this commitment depends on the share price at the time. As at 28 February 2009 the value inherent

in the above 7 843 000 shares was R0,56 million based on the share price of that date of R20,50 per share. This would have required the issue of

27 282 shares in order to discharge this commitment in full. There is no amount payable by participants on exercise. They will receive shares equal in value to

the increase in the share price between the grant date and the exercise date.

Opening balance 1 March 2008 Current year movement 2008 Closing balance 28 February 2009Date Converted Quantity

Price Value option Quantity shares exer- Price Value Price ValueQuantity (R) (R) granted granted Forfeited exercised cised (R) (R) Quantity (R) (R)

161 000 18,15 2 922 150 22/11/05 – 79 500 (621) (2 500) 18,15 (45 375) 238 000 18,15 4 319 7001 900 000 26,31 49 989 000 30/04/06 – – – – – – 1 900 000 26,31 49 989 0002 850 000 32,31 92 083 500 01/03/07 – – – – – – 2 850 000 32,31 92 083 500

100 000 37,80 3 780 000 30/11/07 – – – – – – 100 000 37,80 3 780 000– 31,02 – 01/03/08 2 755 000 – – – – – 2 755 000 31,02 85 460 100

5 011 000 148 774 650 2 755 000 79 500 (621) (2 500) (45 375) 7 843 000 235 632 300

ADCORP EMPOWERMENT SHARE TRUSTThe trust owns 42 802 Adcorp shares of which 30 302 shares were unallocated as at 28 February 2009 as a result of employees leaving the Group. These willbe reallocated during 2009. All the allocated options have vested and therefore can be paid for and the shares transferred into the employee’s name at any timeat the option of the employee:

2004 12 500 Unallocated 30 302

Total 42 802

Movements for the year in the Adcorp Empowerment Share Trust:

Opening balance 2008 Option granted/(cancelled)/(exercised) 2008 Closing balance 28 February 2009Date Quantity

Price Value option Quantity Quantity exer- Price Value Price ValueQuantity (R) (R) granted granted Forfeited cancelled cised (R) (R) Quantity (R) (R)

12 500 8,85 110 625 – – – – – 8,85 – 12 500 8,85 110 625

12 500 110 625 – – – – – – 12 500 110 625 30 302 unallocated 30 302

42 802 110 625 – – – – – – – 42 802 110 625

ADCORP EMPLOYEE SHARE TRUST ESTABLISHED 2007As advised in the circular to shareholders dated 12 April 2007, Adcorp concluded a BBBEE transaction which allows for up to 10% of Adcorp shares to beowned by Adcorp employees, the majority of whom are previously disadvantaged individuals.

The Employee Share Trust owns 6 729 140 Adcorp “A” shares on behalf of the employees of Adcorp. These shares are represented by units which were allocatedto all Adcorp employees in the Group at the time of the initial allocation, which was August 2007. Units which are forfeited due to employees leaving early arereallocated to new employees, however the total number of “A” shares does not change. In 2017 a percentage of the “A” shares will convert to Adcorp ordinaryshares depending on the amount of the notional debt that has been repaid at that time. Based on the amount of the notional debt that has been paid down as at29 February 2008 and using the same share price at that date, the theoretical number of shares that would have vested is nil. This is due to the significant fall-off in share prices.

SUBSIDIARIES AND ASSOCIATESDetails of the company’s operating subsidiaries and associates are set out in Annexure A on pages 80 and 81.

The summarised attributable interest of the company in the profits and losses of its subsidiary companies is as follows:2009 2008R’000 R’000

Total profit after taxation 204 596 206 903Total losses after taxation (2 674) (5 946)

201 922 200 957

SIGNIFICANT SHAREHOLDERSDetails of significant shareholders are included on page 84.

SPECIAL RESOLUTIONSNo special resolutions were passed during the year ended 28 February 2009.

STATUTORY INFORMATIONThe company was incorporated in the Republic of South Africa on 16 July 1974. The registration number is 1974/001804/06. For details of the registered office,company secretary and auditors refer to inside back cover.

DIRECTORS’ REMUNERATION AND INTERESTDetails of directors’ remuneration and interests appear in notes 47 and 48 on pages 74 and 75 of the annual financial statements.

SUBSEQUENT EVENTSNo subsequent event to report on.

DIRECTORATE AND SECRETARYThe names of the directors and company secretary are set out on pages 24, 25 and 37 respectively. Changes to the directorate during 2008/09 are detailed onpages 24 and 26.


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GROUP COMPANY2009 2008 2009 2008

Notes R’000 R’000 R’000 R’000

ASSETSNon-current assets 845 422 675 449 654 066 657 310

Property, plant and equipment 4 59 807 57 549 – 910Intangible assets 5 209 087 182 270 – –Goodwill 6 555 208 402 980 – –Investment in subsidiaries 7 – – 653 072 653 072Investment in associates 8 100 270 – –Other financial assets 9 1 170 – 994 1 103Derivative financial instrument 10 702 3 141 – –Deferred taxation 11 19 348 29 239 – 2 225

Current assets 868 178 714 485 488 872 293 225

Trade and other receivables and prepayments 12 685 943 565 002 – 5 912Amounts due from vendor 13 – 250 – 250Amounts due by subsidiary companies 14 – – 488 872 286 763Assets classified as held-for-sale 15 845 845 – –Taxation prepaid 330 564 – –Cash resources 181 060 147 824 – 300

Total assets 1 713 600 1 389 934 1 142 938 950 535

EQUITY AND LIABILITIESCapital and reserves 803 902 668 171 604 781 533 324

Share capital 16 1 355 1 271 1 776 1 692Share premium 17 384 594 283 070 384 594 283 070Treasury shares 18 (592) (701) – –Non-distributable reserve 19 – – 119 918 119 918Foreign currency translation reserve 20 (372) (688) – –Accumulated profit 418 496 384 798 98 493 128 644

Equity attributable to equity holders of the parent 803 481 667 750 604 781 533 324BEE shareholders’ interest 21 421 421 – –

Non-current liabilities 249 670 195 234 78 755 –

Other non-current liabilities 22 2 700 4 230 – –Long-term loan 23 78 755 – 78 755 –Redeemable preference shares – interest bearing 24 130 000 150 000 – –Obligations under finance lease 25 3 165 2 464 – –Deferred taxation 11 35 050 38 540 – –

Current liabilities 660 028 526 529 459 402 417 211Non-interest-bearing current liabilities 388 791 322 135 216 495 235 728

Trade and other payables 26 257 918 239 369 – 11 557Amounts due to subsidiary companies 14 – – 216 299 215 263Amounts due to vendor 27 32 353 – – –Provisions 28 83 737 74 785 – 7 151Taxation 14 783 7 633 196 1 757Liabilities classified as held-for-sale 15 – 348 – –

Interest-bearing current liabilities 271 237 204 394 242 907 181 483

Current portion of other – non-current liabilities 22/25 3 138 2 260 – –Current portion of long-term loan 23 32 871 – 32 871 –Current portion of redeemable preference shares 24 3 431 3 805 – –Bank overdrafts 231 797 198 329 210 036 181 483

Total equity and liabilities 1 713 600 1 389 934 1 142 938 950 535


Balance sheetsas at 28 February 2009 and 29 February 2008

GROUP COMPANY2009 2008 2009 2008

Notes R’000 R’000 R’000 R’000

CONTINUING OPERATIONSRevenue 29 4 837 123 4 430 105 – 285Cost of sales 31 (3 724 735) (3 349 604) (48) (78)

Gross profit 1 112 388 1 080 501 (48) 207Other income 32 32 695 31 620 27 306 47 754 Administration expenses (305 615) (401 595) (23 074) (127 802)Marketing and selling expenses (451 956) (448 173) (3 581) (4 108)Other operating expenses (160 910) (153 548) (1 490) (3 422)

Operating profit/(loss) 33 226 602 108 805 (887) (87 371)Interest received 34 19 782 7 869 25 102 10 529Interest paid 35 (52 914) (29 574) (25 759) (19 202)Dividends received – – 56 797 209 988Share of profits from associates 18 1 512 – –Impairment of investment – – – (6 726)Impairment of loans – (145) 36 988 (12 961)Profit on disposal of property and equipment 667 409 – –Profit on disposal of operations and subsidiaries – 48 633 – 43 495

Profit before taxation 194 155 137 509 92 241 137 752Taxation 36 (50 082) (40 855) (13 773) (11 066)

Profit for the period from continuing operations 144 073 96 654 78 468 126 686

DISCONTINUED OPERATIONSProfit for the period from discontinued operations 37 – 30 314 – –

Profit for the period 144 073 126 968 78 468 126 686

Profit for the period attributable to ordinary shareholders 144 073 126 968 78 468 126 686

Earnings per shareBasic (cents) 38 272,8 258,5 – –Diluted (cents) 38 271,8 253,4 – –

Distribution to shareholders during the year 222 181 – –

Interim dividend (cents) 62 55 – –Final dividend (cents) in respect of prior year 160 126 – –


Income statementsfor the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

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AttributableForeign Non- to equity Minority BEE

currency distri- Accumu- holders share- share-Share Share Treasury translation butable lated of the holders’ holders’

capital premium shares reserve reserve profit parent interest interest TotalR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

GROUPBalance at 31 December 2006 1 085 57 630 (1 010) – – 252 998 310 703 5 77 310 785 Issue of ordinary shares under employee share option scheme 11 2 615 – – – – 2 626 – – 2 626 Acquisition of BEE shareholders andminority interest – – – – – 3 3 (5) (77) (79)Issue of ordinary shares for theacquisition of subsidiaries 175 222 825 – – – – 223 000 – – 223 000 Issue of “A” ordinary shares in terms of BBBEE transaction – – (168) – – – (168) – 421 253 Foreign currency translation reserve – – – (688) – – (688) – – (688)Fair value adjustment of derivative financial instrument – interest rate cap – – – – – 1 332 1 332 – – 1 332 Treasury shares sold – – 388 – – 60 448 – – 448 Recognition of BBBEE and staff share-based payments – – – – – 95 268 95 268 – – 95 268 Dividend distributions – – 89 – – (91 831) (91 742) – – (91 742)Profit for the period – – – – – 126 968 126 968 – – 126 968

Balance as at 29 February 2008 1 271 283 070 (701) (688) – 384 798 667 750 – 421 668 171 Issue of ordinary shares under employee share option scheme 3 1 818 – – – – 1 821 – – 1 821Issue of ordinary shares for theacquisition of subsidiaries 81 99 706 – – – – 99 787 – – 99 787Foreign currency translation reserve – – – 316 – – 316 – – 316Fair value adjustment of derivative financial instrument – interest rate cap – – – – – (1 756) (1 756) – – (1 756)Recognition of BBBEE and staff share-based payments – – – – – 18 316 18 316 – – 18 316Dividend distributions – – 109 – – (126 935) (126 826) – (126 826)Profit for the period – – – – – 144 073 144 073 – – 144 073

Balance as at 28 February 2009 1 355 384 594 (592) (372) – 418 496 803 481 – 421 803 902

COMPANYBalance at 31 December 2006 1 085 57 630 – – 119 918 (1 479) 177 154 – – 177 154 Issue of ordinary shares under employee share option scheme 11 2 615 – – – – 2 626 – – 2 626 Issue of “A” ordinary shares interms of BBBEE transaction 421 – – – – – 421 – – 421Issue of ordinary shares for the acquisition of subsidiaries 175 222 825 – – – 223 000 – – 223 000Recognition of BBBEE and staff share-based payments – – – – – 95 268 95 268 – – 95 268 Dividend distributions – – – – – (91 831) (91 831) – – (91 831)Profit for the period – – – – – 126 686 126 686 – – 126 686

Balance as at 29 February 2008 1 692 283 070 – – 119 918 128 644 533 324 – – 533 324 Issue of ordinary shares under employee share option scheme 3 1 818 – – – 1 821 – – 1 821Issue of ordinary shares for the acquisition of subsidiaries 81 99 706 – – – 99 787 – – 99 787 Recognition of BBBEE and staff share-based payments – – – – – 18 316 18 316 – – 18 316 Dividend distributions – – – – – (126 935) (126 935) – – (126 935)Profit for the period – – – – – 78 468 78 468 – – 78 468

Balance as at 28 February 2009 1 776 384 594 – – 119 918 98 493 604 781 – – 604 781


Statements of changes in equityfor the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

GROUP COMPANY2009 2008 2009 2008

Notes R’000 R’000 R’000 R’000

OPERATING ACTIVITIESProfit before taxation and dividends 194 155 168 170 92 241 137 752Adjusted for:Dividends received – – (56 797) (209 988)Depreciation 25 522 25 603 235 528Impairment of assets, loans and goodwill – 11 645 (36 988) 19 687Amortisation of intangible assets 56 083 47 738 – –Amortisation of financial asset 130 – – –Profit on disposal of businesses – (90 866) – (43 495)Profit on disposal of property and equipment (667) (409) – –Fair value adjustments 4 281 77 – –Share of profits from associates (18) (1 511) – –Share-based payments expense 18 316 101 966 3 834 92 478Non-cash portion of operating lease rentals 374 1 399 57 308Other non-cash flow income (38) – – –Interest paid 48 632 29 497 25 759 19 202Interest received (19 943) (7 880) (25 102) (10 529)

Cash generated by operatingactivities before working capital changes 326 827 285 429 3 239 5 943(Increase)/decrease in trade and other receivables and prepayments (72 533) (75 540) 5 043 (538)(Decrease)/increase in trade and other payables and provisions (12 009) 58 892 85 259 (7 671)Net movement in holding and fellow subsidiaries’ intercompany accounts – (5 510) (248 492) (193 035)

Cash generated/(utilised) by operations 242 285 263 271 (154 951) (195 301)

Interest paid (48 632) (29 497) (25 759) (19 202)Interest received 19 943 7 880 25 102 10 529Taxation paid 49 (50 713) (65 956) (16 632) (11 020)Dividend paid 50 (126 638) (91 441) (70 029) 118 247

Net cash generated/(utilised) by operating activities 36 245 84 257 (242 269) (96 747)

INVESTING ACTIVITIESAdditions to property, equipment and intangible assets 51 (58 060) (62 458) (68) (434)Proceeds from sale of property and equipment 904 6 552 – –Inflow on disposal of businesses 52 – 96 943 – 49 919Acquisition of businesses 53 (174 985) (447 931) – (184 365)BEE transactional costs – (6 875) – (6 875)Paid to BEE shareholders – (79 100) – –Vendor loan repayments 250 (36) 250 750

Net cash (utilised)/generated by investing activities (231 891) (492 905) 182 (141 005)

FINANCING ACTIVITIESIssue of shares 101 608 226 074 101 608 147 494Net proceeds from issue of “A” ordinary shares – 252 – –Payment for financial instrument purchased – (941) – –Purchase of financial asset (1 300) – – –Long-term loan raised 120 000 225 000 120 000 –Long-term loan repaid (28 374) (75 000) (8 374) –Decrease in non-current interest-bearing liabilities 3 480 1 259 – –

Net cash generated by financing activities 195 414 376 644 213 234 147 494

Net decrease in cash and cash equivalents (232) (32 004) (28 853) (90 258)Net cash and cash equivalents at the beginning of the period (50 505) (18 501) (181 183) (90 925)

Net cash and cash equivalents at the end of the period 54 (50 737) (50 505) (210 036) (181 183)


Cash flow statementsfor the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

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Centralcosts Staffing BPO Discontinued Total

REVENUE– 2009 (R’000) – 4 604 249 232 874 – 4 837 123

– 2008 (R’000) – 4 191 683 238 422 – 4 430 105

Operating profit/(loss)– 2009 (R’000) (29 528) 236 479 19 651 – 226 602

– 2008 (R’000) (118 188) 205 112 21 881 (82) 108 723

EBITDA– 2009 (R’000) (22 245) 295 715 52 578 – 326 048

– 2008 (R’000) (24 935) 253 734 55 782 (82) 284 499

EBITDA profit margin– 2009 (%) – 6,4 22,6 – 6,7

– 2008 (%) – 6,1 23,4 6,4 6,4

EBITDA contribution to Group profit– 2009 (%) (6,8) 90,7 16,1 – 100

– 2008 (%) (8,8) 89,2 19,6 – 100

Asset carrying value– 2009 (R’000) 8 092 1 335 722 369 786 – 1 713 600

– 2008 (R’000) 9 345 1 075 825 298 038 6 726 1 389 934

Liabilities carrying value– 2009 (R’000) 225 480 492 069 192 149 – 909 698

– 2008 (R’000) 201 947 291 539 227 929 348 721 763

Depreciation and amortisation– 2009 (R’000) 381 51 048 29 327 – 80 756

– 2008 (R’000) 469 40 632 31 310 – 72 411

Additions to property and equipment– 2009 (R’000) 341 16 558 10 664 – 27 563

– 2008 (R’000) 362 23 675 13 452 – 37 489

NoteNo segmental information is provided in respect of geographical analysis as the Group operates mainly in South Africa. Refer to note 30 for further details regarding business segments. Revenue shown above is external revenue.


Segment reportfor the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

1. ACCOUNTING FRAMEWORKThe Group applies all applicable International Financial Reporting Standards (IFRS) in preparation of the financial statements. Consequently, all IFRSstatements that were effective at 28 February 2009 and are relevant to its operations have been applied.

At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied in these financialstatements, were in issue but not yet effective:

New and revised standardsIFRS 3: Business Combinations – certain revisions to accounting for business combinations applicable to the Group’s financial year commencing March 2009.IFRS 8: Operating Segments – new standard dealing with segment reporting applicable to the Group’s financial year commencing March 2009.

In May 2008 the IASB released a number of improvements to a whole range of existing accounting standards. These improvements will be applicable tothe Group financial year commencing March 2009.

New interpretationsIFRIC 12: Service Concession Arrangements – applicable to the Group’s financial year commencing March 2008.IFRIC 13: Customer Loyalty Programmes – applicable to the Group’s financial year commencing March 2009.IFRIC 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction – applicable to the Group’s financial yearcommencing March 2008.

The impact of the adoption of the above standards and interpretations still needs to be considered, but is not expected to have a material impact on thefinancial results.

2. SIGNIFICANT ACCOUNTING POLICIESThe financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments and incorporate thefollowing principal accounting policies. In all material respects, these policies have been followed by all companies in the Group. The accounting policiesare consistent with the prior year. The adoption of IFRS 7: Financial Instruments requires additional disclosures and this has been dealt with in thefinancial statements.

Basis of consolidationThe consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries).Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

All intergroup transactions, balances, income and expenses have been eliminated upon consolidation.

All shares and investments are held at cost and are reviewed annually to determine any impairment.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisitionor up to the effective date of disposal, as is appropriate.

Business combinationsThe acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, atthe date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree,plus any costs directly attributable to the business combination. The acquiree’s assets, liabilities and contingent liabilities that meet the conditions forrecognition under IFRS 3 are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over theGroup’s interest in the fair value of identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in thenet fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess isrecognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s portion of the net fair value of the assets, liabilities andcontingent liabilities recognised.

Investment in associatesAn associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significantinfluence is defined as the ability to participate in the financial and operating policy decisions of the investee.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. The carrying amountsof such investments are reduced to recognise any decline, other than a temporary decline, in the value of individual investments.

Where a Group enterprise transacts with an associate of the Group, unrealised profits and losses are eliminated to the extent of the Group’s interest in therelevant associate, except where unrealised losses provide evidence of an impairment of the asset transferred.

TaxationIncome tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. TheGroup’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.


Notes to the annual financial statementsfor the 12 months ended 28 February 2009 and 14 months ended 29 February 2008

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Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding taxbases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generallyrecognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be availableagainst which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises fromgoodwill or from the initial recognition (other than in a business combination) of the other assets and liabilities in a transaction that affects neither thetaxable profit nor the accounting profit.

The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is chargedor credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and whenthey relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Property and equipmentProperty and equipment is stated at cost less accumulated depreciation and any recognised impairment losses.

Depreciation is charged so as to write off the cost or valuation of the assets over their estimated useful lives to its residual value, using the straight-linemethod, on the following basis:

Computers and office equipment 20% – 33%Furniture and fittings 10% – 16,7%Buildings owned and occupied 2,86%Land is not depreciated

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of therelevant lease. Useful lives and residual values are reassessed on an annual basis.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of theasset and is recognised in income.

Intangible assetsIntangible assets acquired separatelyIntangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged ona straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reportingperiod, with the effect of any changes in estimate being accounted for on a prospective basis.

Internally generated intangible assets – research and development expenditureExpenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, allof the following have been demonstrated:• the technical feasibility of completing the intangible asset so that it will be available for use or sale;• the intention to complete the intangible asset and use or sell it;• the ability to use or sell the intangible asset;• how the intangible asset will generate probable future economic benefits;• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible assetfirst meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditure is charged toprofit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairmentlosses, on the same basis as intangible assets acquired separately.

Intangible assets acquired in a business combinationIntangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of anintangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at a cost less accumulated amortisation andaccumulated impairment losses, on the same basis as intangible assets acquired separately.

GoodwillGoodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets,liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.

Goodwill is recognised as an asset and tested for impairment on an annual basis. The valuation of goodwill is done on a discounted cash flow basis andcompared to the carrying value on an annual basis. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.


Notes to the annual financial statements (continued)


On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Non-current assets held-for-saleNon-current assets and disposal groups are classified as held-for-sale if their carrying amount will be recovered principally through a sale transactionrather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is availablefor immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completedsale within one year from the date of classification.

Non-current assets (and disposal groups) classified as held-for-sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Impairment of assets (excluding goodwill)The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If thereis any indication that an asset may be impaired, its recoverable amount is estimated.

The recoverable amount is the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of theasset exceeds its recoverable amount.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised forthe asset in the prior years.

Revenue recognitionRevenue comprises mainly the invoice value of services rendered to customers, as well as commission received and training course income. Revenueexcludes value-added tax.

Revenue is recognised at the date the services are rendered.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts and sales-related taxes.

Dividend incomeDividend revenue from investment is recognised when the shareholder’s right to receive payment has been established.

Investment incomeInvestment income is recognised on the accrual basis by reference to the principal outstanding and the effective interest rates applicable.

Cost of salesCost of sales consists of direct costs of temporary assignees, advertising costs incurred in recruitment and direct expenditure in respect of public relations,research and training courses.

LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All otherleases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value ofthe minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments areapportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of theliability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised inaccordance with the Group’s general policy on borrowing costs.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

Foreign currency transactionsTransactions in foreign currencies are accounted for at the rates of exchange ruling on the date of the transactions. Gains and losses arising from thesettlement of such transactions are recognised in the income statement.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantialperiod of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets isdeducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Government grantsGovernment grants towards staff training costs are recognised in profit or loss over the periods necessary to match them with the related costs and arededucted in reporting the related expense.

Employee benefitsThe company’s contributions to defined contribution plans (either provident or pension funds) in a particular period are recognised as an expense in that period.


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Contributions to medical aid are recognised as an expense in the period during which the related services are rendered.

All employee benefits cease on termination of employment.

ProvisionsProvisions are recognised when the Group has a present obligation as a result of a past event and it is probable that this will result in an outflow ofeconomic benefits that can be reliably estimated.

Share-based paymentsThe Group has complied with the requirements of IFRS 2: Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been appliedretrospectively to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005 and to all liabilities for share-basedtransactions existing at 1 January 2005. The standard therefore applies to share options granted in 2004, 2005, 2006 as well as those granted in 2008 and 2009.

The Group has issued equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at thedate of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vestingperiod, based on the Group’s estimate of shares that will eventually vest.

Fair value is measured by use of the Black-Scholes model. The expected life used in this model has been adjusted, based on management’s best estimate,for the effects of non-transferability, exercise restrictions and behavioural considerations.

Financial instrumentsFinancial assets and financial liabilities are recognised in the Group’s balance sheet when the Group has become party to contractual provisions of the instrument.

Proceeds from disposals which are not due within one year have been discounted to net present value.

Trade and other receivablesTrade and other receivables do not carry any interest and are stated at their nominal value. Trade and other receivables are reduced by appropriateallowances for estimated irrecoverable amounts.

Trade and other payablesTrade and other payables do not carry any interest and are stated at their nominal value.

InvestmentsInvestments in securities are recognised on a trade date basis and are initially measured at cost. Investments are classified as either held for trading oravailable-for-sale, and are measured at subsequent reporting dates at fair value, based on quoted market prices at the balance sheet date. Where securitiesare held for trading purposes, unrealised gains and losses are included in net profit or loss for the period. For available-for-sale investments, unrealisedgains or losses are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain orloss previously recognised in equity is included in the net profit or loss for the period. Proceeds from disposals which are not due within one year havebeen discounted to net present value.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to aknown amount of cash and are subject to an insignificant risk of changes in value.

Bank borrowingsInterest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, including premiums payableon settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are notsettled in the period in which they arise.

Equity instrumentsEquity instruments are recorded at the proceeds received, net of direct issue costs.

Derivative financial instruments and hedge accountingDerivative financial instruments are initially recorded at cost and are remeasured to fair value at subsequent reporting dates. Changes in the fair value ofderivative financial instruments that are designated and effective as cash flow hedges are recognised directly in equity. Amounts deferred in equity arerecognised in the income statement in the same period in which the hedged firm commitment or forecast transaction affects net profit or loss.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise.

Hedge accountingThe Group designates certain hedging instruments, which include derivatives, as either fair value hedges, cash flow hedges, or net hedges of netinvestments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. At the inception of thehedging relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk managementobjectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and ongoing basis, the Group documentswhether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash flows of the hedged item.




Cash flow hedgesThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain orloss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the “other gains and losses” line of the incomestatement if applicable.

Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the incomestatement as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of theasset or liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised,or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains equity and is recognised when the forecasttransaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that wasdeferred in equity is recognised immediately in profit or loss, the cumulative gain or loss that was deferred in equity is recognised immediately in profitor loss.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTYCritical judgements in applying the Group’s accounting policiesIn the process of applying the Group’s accounting policies, which are described in note 2, management has made the following judgements that have asignificant effect on the amounts recognised in the financial statements:

Provision for credit lossesThe provision was measured at the Group’s best estimate of future unrecoverable trade receivables, taking into account circumstances prevailing at year-end. Details of the provision are provided in note 12.

Provision for leave payIn making its judgement, the provision for leave pay was measured at the Group’s best estimate of the expenditure required to settle the obligation atbalance sheet date in accordance with the Basic Conditions of Employment Act. Details of the provision for leave pay are provided in note 28.

Revenue recognitionJudgement is involved in determining an appropriate revenue recognition policy and ensuring that this is compliant with IAS 18: Revenue.

Recoverable amounts from governmentThe Group exercised judgement in determining whether the learnerships amounts are recoverable from government as well as when these amounts arerecoverable. Details of these learnerships are detailed in note 12.

Purchase price allocation relating to acquisitionsThe Group has exercised judgement in determining the purchase price allocation, intangible assets and resulting goodwill relating to the acquisition ofthe business of Staff-U-Need (Pty) Limited. The free cash flow method was used and the key estimates involved were growth rates, discount rate, as wellas return on the contracts or key customer relationships.

Recognition of deferred tax assetsThe Group has exercised judgement in determining whether deferred tax assets should be recognised. Judgement is involved in determining the extent towhich it is probable that taxable profit in the various subsidiaries will be available against which the deferred tax assets will be utilised. Details of thesedeferred tax assets are provided in note 11.

Key sources of estimation uncertaintyImpairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill is allocated. The value-in-use calculation requires the entity to estimate future cash flows expected to arise from the cash-generating unit and to determine a suitable discountrate in order to calculate present value. Details of the impairment of goodwill are provided in note 6.

Share-based paymentsDetermining the value of share-based payments to be expensed requires an estimation using the Black-Scholes pricing model. The model has beenadjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural consideration. Details of share-based payments and assumptions used are provided in note 45.

Residual values and useful lives of assetsThe Group exercised judgement in determining the useful lives of all assets and determining the residual values of these assets.


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ComputerLand, and office

buildings and equipment, Capitalisedleasehold furniture and leased

improvements fittings assets Total Total2009 2009 2009 2009 2008R’000 R’000 R’000 R’000 R’000

4. PROPERTY, PLANT AND EQUIPMENTGROUPBalance at the beginning of the period 16 765 37 729 3 900 58 394 32 775

Assets at cost 23 315 106 488 4 302 134 105 87 649Accumulated depreciation (6 550) (68 759) (402) (75 711) (54 874)

Current year movements

Additions 4 856 21 702 1 005 27 563 37 489

Acquisitions through business combinations – 606 – 606 15 795

Disposal – sale of business – – – – (52)

Cost – – – – (200)Accumulated depreciation – – – – 148

Reclassified as held-for-sale (845) – – (845) (845)

Cost (845) – – (845) (845)Accumulated depreciation – – – – –

Disposals – (352) (37) (389) (2 010)

Cost – (10 680) (1 043) (11 723) (6 628)Accumulated depreciation – 10 328 1 006 11 334 4 618

Depreciation (4 027) (20 313) (1 182) (25 522) (25 603)

Net book value at the end of the period 16 749 39 372 3 686 59 807 57 549

Represented by:Assets at cost 27 326 118 116 4 264 149 706 133 260Accumulated depreciation (10 577) (78 744) (578) (89 899) (75 711)

Net book value at the end of the period 16 749 39 372 3 686 59 807 57 549

COMPANYBalance at the beginning of the period 229 681 – 910 1 004

Assets at cost 422 4 043 – 4 465 4 031Accumulated depreciation (193) (3 362) – (3 555) (3 027)

Additions – 68 – 68 434Depreciation (35) (200) – (235) (528)Transferred to another company (194) (549) – (743) –

Assets at cost (422) (4 111) – (4 533) –Accumulated depreciation 228 3 562 – 3 790 –

Disposals – – – – –

Cost – – – – –Accumulated depreciation – – – – –

Net book value at the end of the period – – – – 910

Represented by:Assets at cost – – – – 4 465Accumulated depreciation – – – – (3 555)

Net book value at the end of the period – – – – 910

The registers of land and buildings are open for inspection at the registered office of the company and its subsidiaries. The Group’s obligations underfinance lease (refer to note 25) are secured by the lessor’s title to the leased assets, which have a carrying amount of R3,7 million.




Accredi-Capitalised Trade- tation of Customer

development marks programmes base Other Total Total2009 2009 2009 2009 2009 2009 2008R’000 R’000 R’000 R’000 R’000 R’000 R’000

5. INTANGIBLE ASSETSGROUPBalance at the beginning of the period 45 099 4 148 875 130 944 1 204 182 270 44 218

Assets at cost 45 099 10 178 968 177 261 3 140 236 646 45 942Accumulated amortisation – (6 030) (93) (46 317) (1 936) (54 376) (1 724)

Additions – – 178 4 400 491 5 069 773Additions from internal developments 25 428 – – – – 25 428 20 193Acquisitions through business combinations – 2 400 – 50 003 – 52 403 170 092

Cost – 2 400 – 50 003 – 52 403 170 092Accumulated amortisation – – – – – – –

Disposals – – – – – – (268)

Cost – – – – – – (354)Accumulated amortisation – – – – – – 86

Amortisation expense – (200) (199) (55 056) (628) (56 083) (47 738)Impairment – – – – – – (5 000)

Net book value at the end of the period 70 527 6 348 854 130 291 1 067 209 087 182 270

Represented by:Assets at cost 70 527 12 578 1 146 231 664 3 631 319 546 236 646Accumulated amortisation – (6 230) (292) (101 373) (2 564) (110 459) (54 376)

Net book value at the end of the period 70 527 6 348 854 130 291 1 067 209 087 182 270

The capitalised development represents costs incurred to date on the development of the Dynamix AX ERP System. The system is currently in the processof development and is not available for use. No amortisation has been recorded for the current year. Once the asset is available for use, it is intended toamortise the software over its estimated useful life of 10 years. R5,7 million interest was capitalised on this project during the 12 months to February 2009.

In the current year, a trademark was acquired in the purchase of Staff-U-Need. This trademark is amortised over its estimated useful life which is seven years.

Accreditation of programmes represent costs incurred to date on accrediting training programmes with the relevant training authorities. Once the asset isavailable for use, it is amortised over its estimated useful life of four years.

Customer base represents the customer bases purchased on acquisition of businesses. The various customer bases acquired are amortised over theirestimated useful life which ranges from three to seven years. Other intangible assets are recognised on the acquisition of Margie Middleton and Associatesbeing learning programmes, NQF accreditations, methodologies and tool development. The asset is amortised over its estimated useful life of five years.

Amortisation of intangible assets is disclosed in operating profit (refer to note 33).


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GROUP COMPANY2009 2008 2009 2008R’000 R’000 R’000 R’000

6. GOODWILLCostOpening balance 429 061 67 606 – –Additional amounts recognised from business combinations during the period 152 228 362 518 – –Derecognised on disposal of subsidiaries – (1 063) – –

Closing balance 581 289 429 061 – –

ImpairmentOpening balance (26 081) (26 081) – –Impairment of goodwill during the period – – – –

Closing balance (26 081) (26 081) – –

Carrying amountAt the end of the period 555 208 402 980 – –

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from thatbusiness combination. After recognition of impairment losses, the carrying amount of goodwill is attributable to the following material CGUs:

GROUP2009 2008R’000 R’000

Staffing 392 569 240 341Business process outsourcing 162 639 162 639

555 208 402 980

The Group tests goodwill annually for impairment.

The recoverable amounts of the CGUs are determined based on the value-in-use calculation which uses the cash flow projections based on financialbudgets approved by management covering a five-year period assuming a growth of 10% per annum. The key assumptions for the discounted cash flowvaluation method are those regarding the discount rate, growth rate and expected changes to selling prices and direct costs during the period.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management. The rate used to discount the forecastcash flows is 11,06% (2008: 13,02%).

During the year Adcorp acquired the business of Staff-U-Need. As a result of this acquisition an amount of R151,61 million was recognised as goodwill.This goodwill was allocated to the Staffing CGU.

During the year Adcorp also acquired additional goodwill amounting to R0,484 million in relation to Capital Outsourcing Group (Pty) Limited which wasacquired last year.


7. INVESTMENT IN SUBSIDIARIES(for details refer to Annexure A)Shares at cost less amounts written off – – 653 072 653 072

Shares at cost – – 659 798 659 798Less: Provision for impairment of investment – – (6 726) (6 726)

Directors’ valuation – – 1 113 023 1 807 042

The investment in Research Surveys has been impaired as the business was sold and the company is now dormant.

The directors’ valuation is determined by reference to the market capitalisation of the Group at the financial reporting date.


8. INVESTMENT IN ASSOCIATES(for details of the Group refer to Annexure A)Carrying values at the beginning of the period 270 3 189 – 1 528Increase/(decrease) in investment (188) 368 – –Share of current period earnings (net of dividends received) 18 1 212 – –Investment disposed – (4 499) – (1 528)

100 270 – –

Total investment in associates 100 270 – –

Directors’ valuation 100 270 – –

Summarised financial information in respect of the Group’s associates isset out below:Total assets 179 143 – –Total liabilities (8) (8) – –

Net assets 171 135 – –

Total revenue 58 194 – –

Total profit for the period 36 89 – –

9. OTHER FINANCIAL ASSETSPDI (previously disadvantaged individuals) Share Trust – – 994 1 103

Adcorp shares42 802 at R7,965 (2008: 42 802 shares at R7,965) – – 341 341Loan to PDI Share Trust – – 653 762

Held-to-maturity investment carried at amortised costRaising fee 1 170 – – –

1 170 – 994 1 103

A raising fee of R1,3 million was paid to Standard Bank to cover the R120 million of the term loan and in terms of IAS 39 needs to be disclosed as a financial asset.This asset is amortised over the period of the loan which is five years. At year-end an amount R0,130 million was amortised to the income statement.

10. DERIVATIVE FINANCIAL INSTRUMENTDerivatives designated and effective as hedginginstruments carried at fair value 702 3 141 – –

Interest rate cap 702 3 141 – –

Details are shown below:Inception date: 25 May 2007Termination date: 31 May 2010Nominal cost of cap: R941 351

The financial instrument is a designated hedge, which was purchased to cover R100 million of the redeemable preference shares. The current effectiveinterest rate on the cap is 13%. The fair value of the financial instrument was determined by an independent party using market data and the effectiveinterest rate method.


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As at Reallocation Charged to Arising on As at29 Feb of deferred the income business 28 Feb

2008 tax Total statement Restructure combination 2009R’000 R’000 R’000 R’000 R’000 R’000 R’000

11. DEFERRED TAXATIONGROUPTax effect of:Deferred tax raised on provisions 25 438 (4 371) 21 067 (3 762) 4 203 – 21 508 Excess tax allowances and depreciation charge 181 – 181 (241) – (60)Expenditure incurred but not allowable for tax purposes in the period in which it is incurred (38 797) 704 (38 093) 14 857 (14 655) (37 891)Rate change adjustment 2 174 (2 701) (527) 135 312 – (80)Operating lease timing adjustments 897 (199) 698 270 – – 968Computed losses 1 315 3 025 4 340 (1 814) – – 2 526Other (509) 3 542 3 033 (1 191) (4 515) – (2 673)

(9 301) – (9 301) 8 254 – (14 655) (15 702)

28 Feb 29 Feb 2009 2008R’000 R’000

Analysed as:Deferred tax assets 19 348 29 239Deferred tax liabilities (35 050) (38 540)

(15 702) (9 301)

As at Reallocation Charged to As at29 Feb of deferred the income Sold on 28 Feb

2008 tax Total statement restructure 2009R’000 R’000 R’000 R’000 R’000 R’000

COMPANYTax effect of:Deferred tax raised on provisions 2 074 230 2 304 1 282 (3 586) –Rate change adjustment (79) – (79) – 79 –Operating lease timing adjustments 236 (236) – 16 (16) –Other (6) 6 – – – –

2 225 – 2 225 1 298 (3 523) –

28 Feb 29 Feb 2009 2008R’000 R’000

Analysed as:Deferred tax assets – 2 225Deferred tax liabilities – –

– 2 225


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12. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS 685 943 565 002 – 5 912

Trade debtors 566 379 498 732 – –Provision for credit losses (6 535) (12 822) – –Deposits and staff loans 4 307 3 327 – 72Other 121 792 75 765 – 5 840

The Group partakes in learnerships that are registered with the Services Seta and receives government grants in order to develop its employees.During the current period the Group incurred training expenses of R12 520 336 (2008: R5 799 198) that have been claimed from the Services Seta.Included in other receivables are amounts due from the Services Seta in respect of learnerships that the Group has engaged in: 4 701 5 896 – –

Opening balance 5 896 9 797 – –Acquired through business combination – 598 – –Claims submitted 12 521 5 799 – –Grants received (13 716) (10 298) – –

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: 566 379 498 732 – –

Domestic 528 761 475 711 – –Foreign 37 618 23 021 – –

The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was: 566 379 498 732 – –Agriculture, hunting, forestry and fishing – 7 830 – –Community, social and personal services 137 629 89 223 – –Construction 41 912 2 992 – –Manufacturing 142 728 143 884 – –Financial intermediation, insurance, real estate and business services 151 790 134 408 – –Electricity, gas and water supply 2 266 9 675 – –Transport, storage and communication 52 673 41 495 – –Mining and quarrying 6 797 9 675 – –Wholesale and retail, repair of motor vehicles, motor cycles, personal and household goods, and hotels and restaurants 30 584 59 549 – –

Debtors days outstanding at end February 2009 was 35 days. No interest is charged on the trade receivables for the first 60 days from the date of theinvoice, thereafter interest may be charged on the outstanding balance. The Group has provided for all receivables that are considered to be doubtful.

Before accepting any new customer, the Group uses an external credit bureau to assess the potential customers’ credit quality and defines credit limit by customer.

Trade receivables are provided as security for the redeemable preference share loan and the term loan as disclosed in notes 24 and 23 respectively.

GROUP COMPANYGross Impairment Gross Impairment Gross Impairment Gross Impairment

2009 2008 2009 2008R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

12. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS continuedThe ageing of trade receivables at the reporting date was: 566 379 6 535 498 732 12 822 – – – –

Not past due 409 964 – 392 119 633 – – – –Past due 0 – 30 days 90 379 35 72 204 924 – – – –Past due 31 – 60 days 24 888 69 15 058 967 – – –Past due 61 – 120 days 17 274 81 13 136 4 781 – – – –Past due 121 – 365 days 23 565 6 041 6 038 5 340 – – – –More than one year 309 309 177 177 – – – –

Movement in the provision for credit losses during the period under review was as follows:

Closing balance 6 535 – 12 822 – – – –

Balance at the beginning of the period 12 822 – 3 763 – – – –Acquisition through business combination – – 2 523 – – – –Impairment loss/(gain) recognised (6 287) – 6 536 – – – –

GROUP COMPANYFair value of

Maximum maximum payments payments

2009 2008 2009 2008R’000 R’000 R’000 R’000

13. AMOUNTS DUE FROM VENDORAmounts receivableWithin one year – 250 – 250In the second to fifth year inclusive – – – –

– 250 – 250Fair value adjustments – – – –

Fair value of maximum payments – 250 – 250

The above represents the payments that are to be received from LR Resources in respect of the sale of Knovation (Pty) Limited.





14. AMOUNTS DUE TO/(BY) SUBSIDIARY COMPANIES 272 573 71 500(for details refer to Annexure A)

488 872 286 763

Amounts due by subsidiary companies 488 872 323 751Less: Provision for impairment of loans – (36 988)

Amounts due to subsidiary companies (216 299) (215 263)

Included in the above is a provision for the impairment of intercompany loans amounting Rnil (2008: R36 988).

15. ASSETS/LIABILITIES CLASSIFIED AS HELD-FOR-SALEAssets 845 845 – –Liabilities – (348) – –

15.1 Property held-for-saleThe Group intends to dispose of one of its properties situated at 22 Swart Street, Kempton Park. The property was previously used in the Group’s staffing operations.Property, plant and equipment 845 845 – –

15.2 Marketing businessLiabilities held-for-sale – (348) – –

Trade and other payables – – – –Taxation – (348) – –Provisions – – – –

Net assets/(liabilities) classified as held-for-sale 845 497 – –

16. SHARE CAPITALAuthorised183 177 151 ordinary shares of 2,5 cents each (2008: 83 177 151) 4 579 2 079 4 579 2 07916 822 849 “A” ordinary shares of 2,5 cents each (2008: 16 822 849) 421 421 421 421

5 000 2 500 5 000 2 500

Issued54 219 381 ordinary shares of 2,5 cents each (2008: 50 831 439) 1 355 1 271 1 355 1 27116 822 849 “A” ordinary shares of 2,5 cents each (2008: 16 822 849) – – 421 421

1 355 1 271 1 776 1 692

The unissued shares are under the control of the directors until the next annual general meeting subject to limitations.Number of shares (’000) 54 176 50 788 54 219 50 831

Opening balance 50 831 43 382 50 831 43 382Issue of ordinary shares under employee share option plan 153 440 153 440Issue of ordinary shares for the acquisition of subsidiaries 3 235 7 009 3 235 7 009

Shares in issue 54 219 50 831 54 219 50 831Share Trust consolidated (43) (43) – –


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17. SHARE PREMIUM 384 594 283 070 384 594 283 070

Balance at 1 March 2008 283 070 57 630 283 070 57 630Arising from the issue of 153 371 ordinary shares under employee share option plan (2008: 439 896) 1 818 2 615 1 818 2 615Arising from the issue of 3 234 571 ordinary shares for the acquisition of subsidiaries (2008: 7 009 448) 99 706 222 825 99 706 222 825

18. TREASURY SHARES (592) (701) – –

Adcorp Empowerment Share Trust consolidated 42 802 shares (2008: 42 802) (533) (1 010) – –Dividends on treasury shares 109 89 – –Nil shares redeemed (2008: 31 200) – 388 – –

(424) (533) – –Adcorp Employee Benefit Trust consolidated 6 729 140 shares (2008: 6 729 140) (168) (168) – –

19. NON-DISTRIBUTABLE RESERVE – – 119 918 119 918Unrealised profit arising on sale of BEE companies into new entity during 2004 – – 119 918 119 918

20. FOREIGN CURRENCY TRANSLATION RESERVE (372) (688)

Opening balance (688) –Arising from business combination – 30Arising on translation of foreign operation 316 (718)

Exchange differences relating to the translation from the functional currencies of the Group’s foreign subsidiaries into rand amounts are brought to account by entries made directly to the foreign currency translation reserve.

21. BEE SHAREHOLDERS’ INTERESTIn terms of the new BEE transaction, Adcorp has created and issued a total of 16 822 849 “A” ordinary shares to its new empowerment shareholders ata par value of 2,5 cents per share, of which 6 729 140 are owned by a company called Moody Blue Trade and Investment 93 (Pty) Limited (Moody Blue),which in turn is wholly owned by the Adcorp Employee Benefit Trust. The remaining “A” ordinary shares are held by BBBEE enterprises.

These shares carry full voting rights and have been funded by a notional debt based on the 90-day VWAP at the time of issue plus interest and reducedby dividends.

In terms of this structure, a 10% shareholding has been made available for the benefit of all full-time Adcorp Group employees, an 8,25% stake has beenallocated to women’s empowerment grouping, Wiphold, and 6,25% has been allocated to empowerment business, Simeka Group.

At the end of 10 years the “A” shares will convert to Adcorp ordinary shares based on the value of the notional debt that will have been paid down at that date.


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21. BEE SHAREHOLDERS’ INTEREST continuedIssued16 822 849 “A” ordinary shares of 2,5 cents each (2008: 16 822 849) 421 421 – –

The fair value of the option in terms of the new BBBEE deal was calculated using the Black-Scholes option pricing model. The inputs into the model are set out below:

The total value of the option is R133 million. Details of amounts to be expensed over the 10-year period are as follows:Current year 5 320 84 233Year 3 – year 9 (Expense of R5 320 million per annum) 37 240 47 880Year 10 887 887

Basis of option valuationWeighted average share price (R) 38,10 38,10Weighted average exercise price (R) 29,91 29,91Expected volatility (%) 31,98 31,98Expected life (years) 9,83 9,83Risk-free rate (%) 8,15 8,15Expected dividend yield (%) 6,22 6,22

Weighted WeightedNumber Number average average

of of exercise exerciseshares shares price price

2009 2008 2009 2008Adcorp Employee Benefit Trust R R

Outstanding at the beginning of the period 6 729 140 – – –Issued during the period – 6 729 140 29,91 29,91Exercised during the period – – – –

Outstanding at the end of the period 6 729 140 6 729 140 29,91 29,91Exercisable at the end of the period – – – –


22. OTHER NON-CURRENT LIABILITIESOperating lease timing adjustment 3 977 4 875 – –

Current portion 1 277 645 – –Non-current portion 2 700 4 230 – –





23. LONG-TERM LOANSECURED – AT AMORTISED COSTBank loans 111 626 – 111 626 –

Current portion 32 871 – 32 871 –Non-current portion 78 755 – 78 755 –

The Group acquired a loan of R120 million from Standard Bank on 22 July 2008 to finance the acquisition of Staff-U-Need. Interest is charged at an inclusiverate, meaning a rate of interest equal to the Johannesburg Inter Bank Agreed Rate (JIBAR) plus 285 (two hundred and eighty-five) basis point per annum (nominal annual compounded quarterly).The loan is repayable over five years. The loan is secured by a charge over the trade receivables and credit balances held by First Rand Bank Limited of the following companies in the Group:

Adcorp Management Services (Pty) LimitedAdcorp Fulfilment Services (Pty) LimitedAdcorp Staffing Solutions (Pty) LimitedCapital Outsourcing Group (Pty) LimitedProduction Management Institute of Southern Africa (Pty) Limited

24. REDEEMABLE PREFERENCE SHARES – INTEREST BEARINGRedeemable preference shares issued 150 000 225 000 – –Redeemable preference shares redeemed (20 000) (75 000) – –

130 000 150 000 – –Interest accrued – current 3 431 3 805 – –

133 431 153 805 – –

225 000 redeemable cumulative variable rate preference shares were issued on 10 July 2007. The shares are redeemable on 30 June 2012 or earlier atAdcorp’s option.

The Group has designated its redeemable cumulative preference shares as financial liabilities as required by IAS 39: Financial Instruments: Recognitionand Measurement. The preference shares have a fixed interest payment and mature on 30 June 2012. To reduce the fair value risk of changing interestrates, the Group has entered into an interest rate cap. An interest rate cap economically hedges the fair value interest rate risk of redeemable cumulativepreference shares. The cap’s notional cost is R941 351 and fixes the interest cost on R100 million of the cumulative redeemable preference shares. The cap matures on 31 May 2010.

25. OBLIGATIONS UNDER FINANCE LEASESFinance leases relate to equipment and vehicles with a lease term of five years. The Group has options to purchase the equipment for a nominal amountat the conclusion of the lease agreements. The Group’s obligations under finance leases are secured by the lessor’s title to the leased assets.

Minimum lease Present value of minimumpayments lease payments

2009 2008 2009 2008R’000 R’000 R’000 R’000

Within one year 2 219 2 012 1 861 1 615Later than one year and not later than five years 3 611 2 789 3 165 2 464

5 830 4 801 5 026 4 079Less: Future finance charges (804) (722) – –

Present value of finance lease obligations 5 026 4 079 5 026 4 079

Current portion 1 861 1 615 1 861 1 615Non-current portion 3 165 2 464 3 165 2 464

5 026 4 079 5 026 4 079


26. TRADE AND OTHER PAYABLES 257 918 239 369 – 11 557

Trade creditors 46 340 42 623 – –VAT 47 368 45 049 – 5 728Accruals 102 747 88 652 – 2 849Other 61 463 63 045 – 2 980

The average credit period on trade and other payables is 30 days. No interest is incurred on trade and other payables unless payment is effected timeously. The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame.

27. AMOUNTS DUE TO VENDORAmount payableWithin one year 35 000 – – –In the second to fifth year inclusive – – – –

35 000 – – –Less: Future finance charges (2 647) – – –

Present value of amount payable 32 353 – – –

Current portion 32 353 – – –Non-current portion – – – –

32 353 – – –

The above represents the estimated payments that are expected to be made to Staff-U-Need (Pty) Limited. The purchase price will be determined overthe next financial year on an earn-out basis.

As at Provisions Provisions Provisions Sold on As at29 Feb raised acquired utilised restructure 28 Feb

2008 2009 2009 2009 2009 2009R’000 R’000 R’000 R’000 R’000 R’000

28. PROVISIONSGROUPLeave pay 41 673 117 122 2 980 (114 201) – 47 574Bonuses 28 974 77 616 4 073 (77 117) – 33 546Other 4 138 59 326 480 (61 327) – 2 617

Total 74 785 254 064 7 533 (252 645) – 83 737

COMPANYLeave pay 284 364 – – (648) –Bonuses 6 867 3 063 – (6 672) (3 258) –

Total 7 151 3 427 – (6 672) (3 906) –

Leave payLeave pay is provided based on leave days due to employees at balance sheet date, at rates prevailing at that date.

BonusesBonuses are provided to employees based on operating entity performance management criteria and are in respect of the current year earnings.


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29. REVENUEContinuing operationsRevenue from the rendering of services 4 837 123 4 430 105 – 285

4 837 123 4 430 105 – 285

30. BUSINESS AND GEOGRAPHICAL SEGMENTSFor management purposes, the Group is currently organised into three operating divisions – central costs, staffing and business process outsourcing. These divisions are the basis on which the Group reports its primary segment information.

The principal activities are as follows:• Central costs – Holding company and head office function including Group

research and tendering services, as well as human resources.• Staffing – Permanent recruitment, flexible staffing both temporary and

contract work, advertising and response handling.• Business process outsourcing – Outsourcing of certain non-core specialised

business functions.• No segmental information is provided in respect of geographical analysis as

the Group operates primarily in South Africa.

31. COST OF SALESThe analysis of cost of sales is as follows: (3 724 735) (3 349 604) (48) (78)

Course material (1 814) (1 753) – –Lecturing (4 804) (5 047) – –Criminal and credit checks (6 196) (9 350) – –Media (121 111) (108 445) – –Placements (24 660) (6 912) – –Production (740) (1 737) – –Project costs (75 809) (39 478) – –Protective clothing (9 385) (9 887) – –Temporary employee costs (3 418 397) (3 104 269) – –Transportation costs (24 347) (24 936) – –Other (37 472) (37 790) (48) (78)

Attributable to: (3 724 753) (3 349 604) (48) (78)

Continuing operations (3 724 753) (3 349 604) (48) (78)

32. OTHER INCOME 32 695 31 622 27 306 47 754

Corporate management fee 8 615 – 18 000 45 000Bad debts recovered 331 52 – –Media rebates and commissions received – – – –Royalties received – – – –Training levies recovered 9 637 12 247 – –Other 14 112 19 323 9 306 2 754

Attributable to: 32 695 31 622 27 306 47 754

Continuing operations 32 695 31 620 27 306 47 754Discontinued operations – 2 – –


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33. OPERATING PROFIT/(LOSS)Operating profit/(loss) is determined after allowing for the following items requiring separate disclosure:Amortisation (refer to note 5) (56 083) (47 738) – –Auditors’ remuneration (3 789) (5 599) (1 048) (2 270)

– fee for audit (4 544) (3 972) (1 028) (1 045)– fee for audit (prior year over-/(underprovision)) 755 (725) – (323)– fee for other services – (902) (20) (902)

Consulting fees (37 293) (25 094) (1 463) (647)Depreciation (refer to note 4) (25 522) (25 603) (235) (528)Foreign exchange gains 7 883 4 056 – –Government grants in respect of learnerships 12 521 5 799 – –Directors’ emoluments – executive directors (14 483) (18 380) – (11 603)– non-executive directors (2 331) (2 402) (1 166) (2 402)Leasing and rentals – properties and premises (37 433) (38 446) (1 034) (2 290)– office furniture and equipment (13 020) (12 535) (115) (137)– motor vehicles (900) (569) – –Staff costs (532 581) (546 133) (11 728) (12 508)Share-based payments expense* (18 316) (101 966) (3 834) (92 478)

34. INTEREST RECEIVED 19 782 7 880 25 102 10 529

Group loans – – 17 113 10 529Bank deposits 11 295 5 856 – –Other 8 487 2 024 7 989 –Fair value adjustments – – – –

Attributable to: 19 782 7 880 25 102 10 529

Continuing operations 19 782 7 869 25 102 10 529Discontinued operations – 11 – –

35. INTEREST PAID (52 914) (29 574) (25 759) (19 202)

Bank overdrafts (37 906) (12 450) (25 759) (11 027)Interest on preference share loan (13 411) (10 224) – –Other 2 685 (6 823) – (8 175)Fair value adjustments (4 282) (77) – –

Attributable to: (52 914) (29 574) (25 759) (19 202)

Continuing operations (52 914) (29 574) (25 759) (19 202)

* The share-based payments expense recorded in the company is net of amounts charged to subsidiaries.





36. TAXATIONSA normal tax – current 46 137 50 779 196 3 369– (over)/underprovision prior year (1 973) (124) 2 182 (858)Deferred taxation (8 119) (18 939) (1 298) (2 304)Rate change (135) (2 180) – 79Secondary tax on companies 14 172 11 451 12 693 10 780Capital gains tax – 216 – –

50 082 41 203 13 773 11 066

Attributable to:Continuing operations 50 082 40 855 13 773 11 066 Discontinued operation – 348 – –

50 082 41 203 13 773 11 066

Standard tax rate (%) 28 29 28 29Normal tax at standard rate 54 363 48 961 25 827 39 948 Adjustment for the tax effect at the standardrate of the following items:Exempt income:– Dividends received – – (15 903) (60 897)– Capital profit on disposal of businesses – (27 467) – (12 612)– Associated company profit already subject to tax (5) (438) – –Non-deductible items charged against income:– Capital losses/(profits) – 1 607 – –– Dividend on preference share loan 3 755 2 908 – –– Interest on bridging loan – 2 371 – 2 371– Impairment of assets and investments – 3 377 (10 308) 5 709– Share-based payments 5 128 29 570 1 073 26 819Special allowances claimed:– Learnerships (23 600) (21 738) – –Tax losses not recognised (154) 671 – (1 244)Capital gains tax – 216 – –Other permanent differences (3 442) (8 106) 391 113Rate change adjustment (135) (2 180) – 79Secondary tax on companies 14 172 11 451 12 693 10 780

Actual tax charge for the period 50 082 41 203 13 773 11 066

Reconciliation of estimated tax lossesavailable in the Group:Estimated losses at the beginning of the period 16 441 46 762 – –Tax losses raised – current period 1 980 702 – –Net tax losses utilised (9 399) (27 217) – –Tax loss disposed – (1 685) – –Tax loss revised on assessment – (2 121) – –

9 022 16 441 – –

Which consists of:Losses recognised 9 022 12 511 – –Losses not recognised – 3 930 – –

9 022 16 441 – –


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37. DISCONTINUED OPERATIONSThe Group disposed of its marketing research business at the beginning of the current period, as was disclosed in the previous year’s annual report.Revenue – – – –Cost of sales – – – –

Gross profit – – – –Other income – 42 235 – –Expenses – (11 573) – –

Profit before taxation – 30 662 – –Taxation – (348) – –

Profit for the period from discontinued operations – 30 314 – –

Cash flows from discontinued operationsNet cash flows from operating activities – (48 708) – –Net cash flows from investing activities – 46 275 – –Net cash flows from financing activities – – – –

Net cash flows – (2 433) – –

38. EARNINGS PER SHAREThe calculation of earnings per share is based on earnings of R144 073 222 (2008: R126 967 830) and ordinary shares of 52 807 733 (2008: 49 122 217) being the weighted average number of shares relative to the above earnings.Profit per share 272,8 258,5 – –

Continuing operations 272,8 196,8 – –Discontinued operations – 61,7 – –

Diluted earnings per share is based on 52 999 656 (2008: 50 108 585) weighted diluted number of shares.Profit per share 271,8 253,4 – –

Continuing operations 271,8 192,9 – –Discontinued operations – 60,5 – –

Reconciliation of diluted number of sharesOrdinary shares 52 807 733 49 122 217 – –Adcorp Employee Share Scheme – shares matured 191 923 986 368 – –

Diluted number of shares 52 999 656 50 108 585 – –


38. EARNINGS PER SHARE continuedReconciliation of headline earningsContinuing operationsProfit for the period 144 073 96 654 – –Impairment of goodwill and investments – 145 – –Profit on sale of property, plant and equipment (net of taxation) (480) (290) – –Discontinued operationsProfit for the period – 30 314 – –Impairment of investments, intangible assets and loans – 11 500 – –Profit on sale of property and equipment (net of taxation) – (42 233) – –

Headline earnings 143 593 96 090 – –

Reconciliation of core headline earningsAdjusted for:Amortisation of intangible assets 55 234 46 808 – –Share-based payments and transaction costs 18 316 101 966 – –Imputed interest charge 4 282 – –Lease smoothing 374 1 399 – –Profit on disposal of continuing operations – (48 633) – –Tax effects on above (15 409) (14 550) – –

Core headline earnings 206 390 183 080 – –

Headline earnings per share – cents 272,1 195,6 – –Diluted headline earnings per share – cents 271,1 191,8 – –

Core headline earnings per share – cents 391,1 372,7 – –Diluted core headline earnings per share – cents 389,6 365,4 – –

Note– The dilution of shares results from the exercise of options in the Employee Share Scheme and

Empowerment Share Trust which are below the year-end market price.

– Headline earnings per share are based on earnings adjusted for profit on sale of asset.

39. CONTINGENT LIABILITIES – GROUP AND COMPANY39.1 The bank has guaranteed payment to creditors on behalf of the company

amounting to R3,988 million (2008: R3,827 million).39.2 The bank has guaranteed payments to creditors on behalf of the Group

amounting to R9,155 million (2008: R8,977 million).

40. CAPITAL COMMITMENTSComputer software (refer to note 5) – 15 225 – –Property – 1 939 – –

Total commitments – 17 164 – –





41. RETIREMENT BENEFITSThe Group makes contributions on behalf of all permanent employees to defined contribution schemes which are governed by the Pension Funds Act of 1956 on behalf of its employees. These costs are charged to the income statement as they occur.Total contribution by the Group for the period 33 583 33 337 267 2 390

42. OPERATING LEASE ARRANGEMENTSThe Group as lesseeMinimum lease payments under operating leases recognised as an expense in the year 48 076 23 717 1 149 2 596

At the balance sheet date, the Group has outstanding commitments under non-cancellable operating leases which fall due as follows: 69 344 106 015 – 12 845

Within one year 30 398 36 243 – 2 287In the second to fifth years inclusive 38 946 69 772 – 10 558After five years – – – –

Average lease terms (months) 49 58 – 54

43. FINANCIAL RISK MANAGEMENTLiquidity riskThis is the risk of not being able to generate sufficient cash to meet commitments to borrowers, depositors and other creditors at any point in time.

The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. Borrowing facilities are reflected in note 56.

Credit riskThe Group maintains cash, cash equivalents and short-term investments with various financial institutions. The Group’s policy is designed to limit exposure with any one institution and ensure a high credit standing for the financial institution with which such transactions are executed.

Credit risk with respect to trade accounts receivable is limited due to the blue-chip nature of the Group’s client base. Credit assessments are done and continually updated on all the Group’s clients.

Other financial assets/liabilitiesThe directors consider that the carrying amount of trade and other receivables and payables approximates their fair value.

44. DIVIDEND PAIDAn interim dividend of 55 cents per share was declared on 17 October 2007 and was paid to shareholders on 10 December 2007 – 27 953 – 27 953A final dividend of 160 cents per share was declared on 7 May 2008 and was paid to shareholders on 1 September 2008 – 81 346 – 81 346An interim dividend of 55 cents per share was declared on 22 October 2008 and was paid to shareholders on 8 December 2008 33 535 – 33 535 –A final dividend of 160 cents per share was declared on 6 May 2009 and will be paid to shareholders on 3 August 2009 86 751 – 86 751 –(Dividend paid based on 54 219 381 shares in issue at 29 May 2009)


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45. SHARE-BASED PAYMENTSEmployee share option planThe Group operates three employee share option plans of which two have been discontinued and are in the process of winding down.

The original employee share schemes were replaced by a new share scheme in 2006 as changes in tax, accounting and regulatory treatment of share-basedpayments has rendered the old schemes suboptimal.

1. Adcorp original Employee Share Option Scheme and Adcorp Empowerment TrustThe Group has two equity-settled share option schemes for employees of the Group. Options are exercisable at a price equal to the average quotedmarket price of the company’s shares on the date of grant. The vesting period is two years. If the options remain unexercised after a period of 10years from the date of grant, the options will expire. Options are forfeited if the employee leaves the Group before the options vest.

2. New Adcorp Employee Share SchemeUnder the new scheme, eligible employees receive conditional allocations of share appreciation rights (SARs) or performances shares (PFs). TheSARs provide employees, at the date the right vests, with the right to receive shares equal to the appreciation in the share price since grant date whilethe PFs vest depending on performance.

Both SARs and PFs vest two years after the grant date. The vesting of the shares is subject to various non-market-related performance criteria andmay vary between option holders. All SARs and PFs expire after six years from grant date.

The following share-based payment arrangements were in existence during the current and comparative reporting periods:

Grant Expiry Exercise Fair value atNumber date date price (R) grant date (R)

Issued 31 May 2004 103 000* 24/06/04 31/05/14 13,00 3,28Issued 31 May 2005 238 000 22/11/05 31/05/11 18,15 6,78Issued 31 May 2006 1 900 000 30/04/06 31/05/12 26,31 4,30Issued 1 March 2007 2 850 000 1/04/07 31/03/13 32,31 4,04Issued 1 December 2007 100 000 1/12/07 30/11/13 37,80 5,98Issued 1 March 2008 2 755 000 3/01/08 28/02/10 31,02 4,96

* Old Adcorp Employee Share Option Scheme.

This fair value was calculated using the Black-Scholes option pricing model. The inputs into the model were as follows:

2009 2008

Weighted average share price (R) 31,01 32,50Weighted average exercise price (R) 31,02 32,31Expected volatility (%) 26,86 21,15Expected life (years) 2,000 2,000Risk-free rate (%) 9,59 8,02Expected dividend yield (%) 6,00 6,00

Expected volatility was determined by calculating the historical volatility of the company’s share price on the expected life of the option.

The following reconciles the outstanding share options granted under the employee share schemes at the beginning and end of the financial period:

Number Weighted Number Weightedof average of average

share exercise share exerciseoptions price options price

2009 2009 2008 2008Adcorp Employee Share Option Scheme (R) (R)

Outstanding at the beginning of the period 118 000 12,14 234 000 12,10Forfeited during the period – – 2 000 13,00Exercised during the period (22 000) 13,00 (118 000) 11,31Adjustment prior period 40 000 8,85 – –

Outstanding at the end of the period 136 000 11,33 118 000 12,14

Exercisable at the end of the period 136 000 11,33 118 000 12,14

Number Weighted Number Weightedof average of average

share exercise share exerciseoptions price options price

2009 2009 2008 2008Adcorp Employee Share Option Scheme (R) (R)

3. PDI Adcorp Employee Share Option Scheme Outstanding at the beginning of the period – – 25 000 15,73Forfeited during the period – – – –Exercised during the period – – (25 000) 15,73Granted during the period – – – –

Outstanding at the end of the period – – – –

Exercisable at the end of the period – – – –

Adcorp Share Appreciation Rights Share TrustOutstanding balance at the beginning of the period 5 459 500 21,21 2 580 500 24,16Forfeited during the period – – (30 000) 18,15Granted during the period 2 755 000 32,01 2 950 000 32,31Exercised during the period (2 500) 18,15 (41 000) 18,15Exercised during 2007 adjustment (369 000) 18,15 – –

Outstanding at the end of the period 7 843 000 23,89 5 459 500 21,21

Exercisable at the end of the period 5 088 000 19,68 2 509 500 21,21

4. Adcorp Employee Benefit Trust (arising from the BBBEE – refer to note 21)Outstanding balance at the beginning of the period 6 729 140 29,91 – –Granted during the period – – 6 729 140 29,91Outstanding at the end of the period 6 729 140 29,91 6 729 140 29,91

Exercisable at the end of the period – – – –

The following share options granted under the employee share option plans were exercised during the financial year:

Option series Number exercised

2009Issued 31 May 1998 750Issued 31 May 2000 120 000Issued 31 May 2002 10 000Issued 31 May 2004 22 000Issued 31 May 2005 2 500

155 250

2008Issued 31 May 1996 3 200Issued 31 May 2000 93 000Issued 31 May 2001 10 611Issued 31 May 2002 40 000Issued 31 May 2004 78 000Issued 31 May 2005 410 000

634 811

Staff members were permitted to exercise their shares at the end of April, July, October and January of this financial year, and the average share pricefor the period was R26,40 (2008: R36,73).

The Group recognised a total expense of R18 315 936 (including the BBBEE transaction (refer to note 21) during the year) (2008: R101 965 545) relatedto equity-settled share-based payment transactions.


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Holding company Accounting andSale of services management fees marketing fees Rental

2009 2008 2009 2008 2009 2008 2009 2008R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

46. RELATED PARTIESThe Group did not enter into any transactions with Group parties other than those with subsidiaries which were eliminated on consolidation.

All transactions took place on an arm’s length basis.

46.1 Trading transactionsDuring the period, Groupentities entered into thefollowing transactions:Adcorp Holdings Limited – – (45 000) (45 000) 526 976 – –Subsidiaries of Adcorp Holdings Limited 14 978 47 348 18 000 45 000 61 790 60 824 – –

GROUP2009 2008R’000 R’000

46.2 Compensation paid to key management (which excludes payments to directors set out in note 47 below)Short-term employment benefits 26 361 18 679Share-based payments 92 552

Total 26 453 19 231

Medical Total Total Profit on Profit on Total TotalBonus/ aid/ Direc- cost to cost to share share remu- remu-

profit provident Allow- tors’ company company options options neration nerationSalary share fund ances Sundry fees 2009 2008 2009 2008 2009 2008R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

47. DIRECTORS’ EMOLUMENTSExecutiveH Barenblatt* – – – – – – – 2 500 – 565 – 3 065F Burd 1 407 1 994 299 5 – – 3 705 3 323 – – 3 705 3 323M Liphosa* – – – – – – – 1 304 – 566 – 1 870R McGregor* – – – – – – – 4 112 – 572 – 4 684R Pike 1 827 2 982 470 263 – – 5 542 4 958 – – 5 542 4 958PC Swart 1 336 2 119 369 149 26 – 3 999 3 964 – 148 3 999 4 112C Bomela 1 170 999 – 225 – – 2 394 1 998 – – 2 394 1 998

5 740 8 094 1 138 642 26 – 15 640 22 159 – 1 851 15 640 24 010

Non-executive directorsF Khanyile* – – – – – – – 102 – 172 – 274G Negota* – – – – – – – 16 – – – 16S Sebotsa* – – – – – – – 16 – – – 16S Shonhiwa* – – – – – – – 11 – – – 11MR Ramaite – – – – – 88 88 51 – – 88 51PK Ward* – – – – – 143 143 134 – – 143 134T Ramano – – – – – 123 123 51 – – 123 51GP Dudu – – – – – – – 17 – – – 17LM Mojela – – – – – 65 65 41 – – 65 41F van Zyl Slabbert 996 697 186 115 17 – 2 011 1 953 – 566 2 011 2 519

996 697 186 115 17 419 2 430 2 392 – 738 2 430 3130

*Resigned: H Barenblatt resigned 21 February 2007 S Sebotsa resigned 28 February 2007 R McGregor resigned 28 February 2007G Negota resigned 28 February 2007 S Shonhiwa resigned 28 February 2007 F Khanyile resigned 21 February 2008M Liphosa resigned 28 February 2007 PK Ward resigned 10 June 2009




Number of Number of Number ofunexercised options options Number of Date

options granted exercised options Option fromDirectors’ shareholding as at in during as at price whichat 28 February 2009 29/02/2008 2008/9 2008/9 28/02/2009 (R) exercisable

48. DIRECTORS’ SHAREHOLDINGC Bomela 250 000 – – 250 000 26,31 31/05/08

150 000 – – 150 000 32,31 28/02/09– 300 000 – 300 000 31,02 28/02/10

FD Burd 30 000 – – 30 000 18,15 31/05/07250 000 – – 250 000 26,31 31/05/08300 000 – – 300 000 32,31 28/02/09

– 300 000 – 300 000 31,02 28/02/10RL Pike 50 000 – – 50 000 18,15 31/05/07

350 000 – – 350 000 26,31 31/05/08350 000 – – 350 000 32.31 28/02/09

– 350 000 – 350 000 31,02 28/02/10PC Swart 30 000 – – 30 000 6,35 31/05/05*

30 000 – – 30 000 13,00 31/05/06*30 000 – – 30 000 18,15 31/05/07

250 000 – – 250 000 26,31 31/05/08300 000 – – 300 000 32,31 28/02/09

– 300 000 – 300 000 31,02 28/02/10F Van Zyl Slabbert 200 000 – – 200 000 26,31 31/05/08

200 000 – – 200 000 32,31 28/02/09– 200 000 – 200 000 31,02 28/02/10

* Old Adcorp Employee Share Option Scheme.

As at 28 February 2009 the share price was R20,50 per share resulting all options above R20,50 having no value at that date.

Number of Number ofshares shares

held as at held as at29 Feb 2008 28 Feb 2009Beneficially Beneficially

Directors’ interest in shares held held

RL Pike 249 630 249 630FD Burd 100 100MR Ramaite 15 000 15 000


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49. TAXATION PAID Amount (unpaid)/prepaid at the beginning of the period (7 417) 3 032 (1 757) 514Amount charged to income statement (50 082) (41 203) (13 773) (11 066)Adjustment for deferred tax charged to income statement (7 667) (19 893) (1 298) (2 225)Taxation liability disposed – (3 860) – –Taxation acquired – (11 449) – –Amount (prepaid)/unpaid at the end of the period 14 453 7 417 196 1 757

Net cash payment (50 713) (65 956) (16 632) (11 020)

50. DIVIDEND PAIDAmounts declared and paid (126 934) (91 831) (126 935) (91 831)Received on treasury shares 109 89 109 90Received from subsidiaries – – 56 797 209 988

Net cash (payments)/receipts before cash from associates (126 826) (91 742) (70 029) 118 247Received from associates 188 301 – –

Net cash (payments)/receipts (126 638) (91 441) (70 029) 118 247

51. ADDITIONS TO PROPERTY, EQUIPMENT AND INTANGIBLE ASSETSLand and buildings – replacement (4 856) (9 840) – –Furniture and computer equipment – replacement (22 707) (31 772) (68) (434)Accreditation of programmes (178) (653) – –Customer lists (4 891) – – –Computer software (in progress) – expansion (25 428) (20 193) – –

(58 060) (62 458) (68) (434)

52. NET CASH FLOW ON DISPOSAL OF BUSINESSESGoodwill – 1 063 – –Property and equipment – 4 133 – –Intangibles – 268 – –Trade, other receivables and prepayments – 20 081 – –Investment in associate – 4 536 – –Trade and other payables – (26 933) – –Provisions – (2 908) – –Long-term liabilities – (7) – –Loans – 13 441 – –Deferred taxation – 76 – –Taxation – 3 860 – –Cash and cash equivalents – 2 774 – –

Book value of net assets sold – 20 384 – –Profit on disposal of operations and subsidiaries – 90 866 – –

Consideration – 99 717 – –Less: Cash and cash equivalents disposed of – (2 774) – –

Net cash inflow on disposal – 96 943 – –

Proportionof shares Cost of

Principal Date of acquired acquisitionSubsidiary acquired activity acquisition (%) R’000

53. ACQUISITION OF BUSINESSES2009Staff-U-Need Flexible staffing 01/08/08 – 209 095Capital Outsourcing Group (Pty) Limited Flexible staffing 01/06/07 100 484*Adcorp Flexible Staffing Solutions (Pty) Limited Flexible staffing 01/01/07 100 133*

– 209 712

* Refer to note 6.

2008Employ-Rite (Pty) Limited – final transaction costs Flexible staffing 01/12/06 – 95Adcorp Flexible Staffing Solutions (Pty) Limited Flexible staffing 01/01/07 25 24 729JobVest (Pty) Limited Permanent staffing various 5 2FMS Marketing Solutions (Pty) Limited Business process outsourcing 01/01/07 100 231 363Capital Outsourcing Group (Pty) Limited Flexible staffing 01/06/07 100 258 699

514 888


Total purchase consideration for all businesses combinations 209 712 514 888 – 256 365Less: Non-cash consideration for Adcorp Flexible Staffing Solutions (Pty) Limited (133) – – –Less: Amount owing to vendor (29 234) – – –Add: Interest 1 163 – – –Less: Shares issued in respect of FMS Marketing Solutions

(Pty) Limited and Capital Outsourcing Group (Pty) Limited – (79 000) – (72 000)Less: Cash and cash equivalents acquired (6 523) 12 043 – –

Cash outflow on acquisition of businesses 174 985 447 931 – 184 365

AdcorpCapital Flexible

Outsourcing StaffingStaff-U- Group Solutions

Need (Pty) Limited (Pty) Limited TotalR’000 R’000 R’000 R’000

The fair value of the assets and liabilities acquired in respect of the various acquisitions in the period are as follows:Property, plant and equipment 606 – – 606Software 63 – – 63Trade and other receivables 47 939 – – 47 939Cash and cash equivalents 6 523 – – 6 523Trade and other payables (27 799) – – (27 799)Provisions (7 532) – – (7 532)

19 800 – – 19 800Identified intangibles arising on acquisition through valuation 52 340 – – 52 340Deferred taxation arising on intangibles acquired (14 655) – – (14 655)Resulting goodwill arising on acquisition 151 610 484 133 152 227

Total consideration 209 095 484 133 209 712


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53. ACQUISITION OF BUSINESSES continuedIn complying with purchase accounting IFRS 3, the Group determined the fair value of the assets and liabilities acquired on the acquisition of businesses.Valuations were performed, using the excess earning method and relief from royalty method to determine the value of the intangibles.

The resulting difference between the identified tangible assets, intangible assets and liabilities was attributable to goodwill. Details of the amount ofintangible assets and resulting goodwill arising on each business combination is set out in the table on page 77.

Staff-U-Need (“SUN”) was acquired with effect from 27 July 2008 and was funded by a combination of borrowings and shares issued.As at 28 February2009, R35 million is owing to the SUN vendors and this amount will be paid in September 2009, dependent on certain hurdles being met. Included in netprofit for the period is R21,0 million.attributable to the additional business generated by SUN. Had this business combination been effected 1 March 2008,the revenue of the Group would be R4,968 million and net profit R196,8 million. The directors of the Group consider these pro forma numbers to represent an approximate measure of the performance of the combined Group on annualised basis and to provide a reference point for comparison infuture periods.


54. CASH AND CASH EQUIVALENTSCash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:Cash resources 181 060 147 824 – 300Bank overdrafts (231 797) (198 329) (210 036) (181 483)

(50 737) (50 505) (210 036) (181 183)

Bank overdrafts are considered as part of cash and cash equivalents as they form part of the cash management system.

55. FINANCIAL INSTRUMENTSThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholdersthrough the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2008. The capital structure of the Groupconsists of debt, which includes the borrowings disclosed in notes 22 to 25, cash and cash equivalents and equity attributable to equity holders of theparent, comprising issued capital, reserves and retained earnings as disclosed in the notes. The Group’s executive management committee reviews thecapital structure on an annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital.The Group has a target gearing ratio of 30% determined as the proportion of net debt to equity. The current higher gearing ratio target of 38% results fromthe acquisitions made in the financial period.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on whichincome and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument, are disclosed in the accountingpolicies on pages 49 to 53.


55. FINANCIAL INSTRUMENTS continued55.1 Categories of financial instruments

Financial assets

Amortised cost 1 170 – – –Derivative instruments in designated hedge accounting relationships 702 3 141 – –Loans and receivables (including cash resources) 867 003 713 076 559 174 293 225Financial liabilitiesAmortised cost (including bank overdraft) 776 128 600 457 608 263 408 303

The following table details the Group’s remaining contractual maturity for its financial liablities:Within one year 561 508 443 763 529 508 193 040Later than one year and not later than five years 214 620 156 694 78 755 215 263More than five years – – – –

55.2 Financial risk management objectivesThe Group’s executive and head office treasury function provides services to the business, coordinates access to domestic financial markets,monitors and manages the financial risks relating to the operations of the Group through internal risk reports, which analyse exposures by degreeand magnitude of risks. These risks include market risk (including fair value interest rate risk and price risk), credit risk, liquidity risk and cashflow interest rate risk. The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge these riskexposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors. The Group does not enter intoor trade financial instruments, including derivative financial instruments, for speculativepurposes. The head office treasury function reportsregularly to the executive, which monitors risks and policies implemented to mitigate risk exposures.

55.3 Interest rate risk managementThe Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed bythe Group by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate cap contracts. Hedgingactivities are evaluated to align with interest rate views and defined risk appetite, ensuring optimal hedging strategies are applied, by eitherpositioning the balance sheet or protecting interest expense through different interest rate cycles.

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instrumentsat the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet datewas outstanding for the whole year.

A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and representsmanagement’s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher/lower and all othervariables were held constant, the Group’s profit for a year would decrease/increase by R1 539 000 after tax.

The Group has used an interest rate cap contract for fixing the interest cost on R100 million of the redeemable preference share loan ofR130 million, which was owing at 28 February 2009. This contract enabled the Group to mitigate the risk of cash flow exposures on the issuedvariable rate debt. The fair value of the interest rate cap at the reporting date was determined by discounting the future cash flows at the applicablemarket rates.

56. GROUP OVERDRAFT FACILITIESThe Group had the following overdraft facilities as at 28 February 2009:ABSA R50 millionFirst National Bank R150 million

Total overdraft facility R200 million

These facilities are repayable on demand and bear interest at rates linked to the prime overdraft rate.

57. SUBSEQUENT EVENTSNo subsequent event to report on.


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Annexure A: Details of subsidiaries and associates

Authorised Issuedshare capital share capital

Name of subsidiary Nature of business/status Feb 2009 Feb 2008 Feb 2009 Feb 2008

Adcorp Accountability (Pty) Limited* Dormant 4 000 4 000 200 200Adcorp Communication Solutions (Pty) Limited Sold – 10 000 – 10 000Adcorp Flexible Staffing Solutions (Pty) Limited Dormant 10 000 10 000 10 000 10 000Adcorp Fulfilment Services (Pty) Limited Holding company 10 000 10 000 9 000 9 000Adcorp Management Services (Pty) Limited Holding company 4 000 4 000 400 400Adcorp Staffing (Pty) Limited* Dormant 4 000 4 000 1 1Adcorp Staffing Solutions (Pty) Limited Holding company 4 000 4 000 100 100Adcorp Support Services (Pty) Limited Dormant 1 000 – 100 –Adcorp UK Limited Dormant 3 384 3 384 308 308Business Employee and Management Training (Pty) Limited* Training 1 000 1 000 100 100Capacity Outsourcing (Pty) Limited* Dormant 4 000 4 000 200 200Capital Outsourcing Group (Pty) Limited* Flexible Staffing 100 000 100 000 10 600 10 600Capital Outsourcing Group (Pty) Limited – Australia* Flexible staffing 100 100 100 100Capital Outsourcing Group – Malawi* Flexible staffing 10 000 10 000 10 000 10 000Capital Outsourcing Group Limitada – Mozambique* Flexible staffing – – – –Capital Outsourcing Group (UK) Limited – United Kingdom Flexible staffing 1 000 1 000 1 1Charisma Healthcare Solutions (Pty) Limited* Dormant 1 000 1 000 100 100D/@bility (Pty) Limited Deregistered – – – –DAV Professional Placement Group (Pty) Limited Dormant 1 000 1 000 100 100Emmanuels Staffing Services (Pty) Limited* Dormant 1 000 1 000 100 100Employ-Rite (Pty) Limited Dormant 1 000 1 000 100 100FMS Marketing Solutions (Pty) Limited Dormant 1 000 1 000 1 000 1 000Funerary Marketing Solutions (Pty) Limited Dormant 1 000 1 000 100 100Ikhwezi Staffing Solutions (Pty) Limited* Dormant 1 000 1 000 100 100JobVest (Pty) Limited (70% owned) Recruitment 4 000 4 000 2 000 2 000Knovation (Pty) Limited Sold – – – –Premier Personnel (Pty) Limited Dormant 100 100 100 100PMI of South Africa (Pty) Limited Training 100 100 100 100Quest Flexible Staffing Solutions (Pty) Limited* Dormant 100 100 100 100Quest Holdings (Pty) Limited Dormant 10 000 10 000 10 000 10 000Research Surveys (Pty) Limited Dormant 20 000 20 000 200 200Sibanye Staffing (Pty) Limited Dormant 1 000 1 000 1 000 1 000Stand 948 Melville (Pty) Limited Deregistered – 1 000 – 100

Subtotal negativeSubtotal positive

Total subsidiaries

Name of associateCareer Junction (Pty) Limited Sold – – – –The Customer Equity Company (Pty) Limited Sold – – – –Private Sector Finance** Financial services – – – –Klatrade 200074 (Pty) Limited Training 1 000 1 000 1 000 1 000Shopper Behaviour Research (Pty) Limited Sold – – – –Sishayele Contact Centre Solutions (Pty) Limited Sold – – – –Thetha Call Centre Staffing (Pty) Limited Sold – – – –

Subtotal negativeSubtotal positive

Total associates

* Owned by subsidiary companies.** Joint-venture operation between Capital Outsourcing Group (Pty) Limited and PSF Sector Finance.


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Number of Cost of investment Indebtedness (to)/ Attributableshares held (before write-downs) by the subsidiary profit/(loss)

R’000 R’000 R’000 R’000 R’000 R’000Feb 2009 Feb 2008 Feb 2009 Feb 2008 Feb 2009 Feb 2008 Feb 2009 Feb 2008

200 200 – – – 14 845 287 (1 875)7 500 7 500 – – – – – (2 706)7 500 7 500 357 469 357 469 – – – –9 000 9 000 59 59 96 873 6 840 54 916 1 014

400 400 – – 9 886 6 814 (2 466) 1 3281 1 – – – 2 880 4 207 8 050

100 100 12 855 12 855 369 085 154 217 20 603 6 538100 – – – – – – – 308 308 – – – – – –100 100 – – – – 4 409 2 139200 200 – – 32 60 220 21 400 21 948

10 600 10 600 – – – 5 895 44 984 19 893100 100 – – – – (28) (312)

10 000 10 000 – – – – 720 2– – – – – – 1 825 91 1 – – – – (208) (189)

100 100 – – – 6 993 758 5 591– – – – – – – 1 920

100 100 7 270 7 270 – 15 104 9 467 6 604100 100 – – – 4 260 7 393 21 701100 100 41 478 41 478 – 2 124 3 249 4 777

1 000 1 000 231 363 231 363 – 2 684 13 933 20 715100 100 – – – – – – 100 100 – – – – – –

2 000 1 400 3 3 12 996 8 230 4 042 465– – – – – – – (842)

100 100 1 946 1 946 – – – –100 100 629 629 (1 412) 2 082 4 142 2 603100 100 – – – 30 563 8 289 32 874

10 000 10 000 – – (197 031) (197 031) – –200 200 6 726 6 726 (17 856) (18 232) – 48 732650 650 – – – – – –

– 100 – – – – – (22)

(216 299) (215 263) (2 674) (5 946)659 798 659 798 488 872 323 751 204 596 206 903

659 798 659 798 272 573 108 488 201 922 200 957

– – – – – – – 813– – – – – – – –– – 35 222 – – – 54

750 500 65 48 – – 18 45– – – – – – – –– – – – – – – 600– – – – – – – –

– – – – 18 1 512100 270 – – – –

100 270 – – 18 1 512


Administration

ADCORP HOLDINGS LIMITEDRegistration number 1974/001804/06 Founded 1968, listed 1987

SECRETARY AND REGISTERED OFFICE L SudburyBlock A, 28 on SloaneSloane StreetBryanston, 2021PO Box 70635, Bryanston, 2021Tel 011 244 5300Fax 011 244 5310Email [email protected]

AUDITORS Deloitte & ToucheThe Woodlands20 Woodlands DriveWoodmeadSandton2196Private Bag X6Gallo Manor, 2052Tel 011 806 5000Fax 011 806 5111

LEGAL ADVISORSRoodt Inc AttorneysRegistration number 2003/016254/21Block A, Eton Road Office Park7 Eton RoadSandhurst, 2196PO Box 78894, Sandton, 2146Tel 011 685 0000Fax 011 685 0001

Rudolph Burnstein and AssociatesRegistration number 2008/017666/21Block A, Eton Road Office Park7 Eton RoadSandhurst, 2196PO Box 78894, Sandton, 2146Tel 011 669 7600Fax 011 669 7601

TRANSFER SECRETARIES Link Market Services SA (Pty) LimitedRegistration number 2000/007239/0711 Diagonal StreetJohannesburg, 2001PO Box 4844Johannesburg, 2000Tel 011 630 0800Fax 086 674 1960

COMMERCIAL BANKERSFirstRand of Southern Africa LimitedRegistration number 1905/001225/06

ABSA Bank LimitedRegistration number 1986/004794/06

The Standard Bank of South Africa LimitedRegistration number 1962/000738/06

SPONSORS Deloitte & Touche Sponsor Services (Pty) LimitedThe Woodlands20 Woodlands DriveWoodmeadSandton2196Private Bag X6Gallo Manor, 2052Tel 011 806 5616Fax 011 806 5666


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Shareholders’ information

Annual general meeting of the company tobe held on Wednesday, 26 August 2009


Shareholder analysis and diary

Number of % of total Number of % of shareholders shareholders shares shares

1. ANALYSIS OF SHAREHOLDINGS1 – 1 000 799 48,22 324 099 0,601 001 – 10 000 574 34,64 2 008 006 3,7010 001 – 100 000 184 11,10 6 872 394 12,68100 001 – 1 000 000 91 5,49 27 181 162 50,131 000 001 – and above 9 0,54 17 833 720 32,89

Totals 1 657 100,00 54 219 381 100,00

2. DISTRIBUTION OF SHAREHOLDERSBanks 12 0,72 3 618 276 6,67Close corporations 25 1,51 56 617 0,10Individuals 1275 76,95 35 206 251 64,93Insurance companies 16 0,97 1 751 364 3,23Collective investment schemes and mutual funds 37 2,23 4 989 702 9,20Nominees and trusts 198 11,95 2 731 709 5,04Pension funds and medical schemes 64 3,86 4 217 309 7,78Private companies 28 1,69 1 586 063 2,93Adcorp share trust 1 0,06 19 288 0,04The company 1 0,06 42 802 0,08

Totals 1 657 100,00 54 219 381 100,00

3. SHAREHOLDER SPREADShare trust 1 0,06 19 288 0,04Directors 3 0,18 264 730 0,49The company 1 0,06 42 802 0,08

Non-public 5 0,30 326 820 0,60

Public 1 652 99,70 53 892 561 99,40

Totals 1 657 100,00 54 219 381 100,00

4. MAJOR SHAREHOLDERS (5% AND MORE OF THE SHARES IN ISSUE)Investec Asset Management 5 124 256 9,45

SHAREHOLDERS’ DIARY FOR 2009Financial year-end FebruaryAnnual general meeting 09:00 Wednesday, 26 August 2009

ReportsInterim results OctoberReviewed annual results MayAudited annual financial statements July

FINAL DIVIDENDFinal dividend of 160 cents per share (2008: 160 cents per share) was declared on 6 May 2009 payable to shareholders recorded in the register of the companyat the close of business on the record date appearing below. The salient dates pertaining to the final dividend are as follows:Last day to trade cum final dividend Friday, 24 July 2009First day to trade ex final dividend Monday, 27 July 2009Record date Friday, 31 July 2009Payment date Monday, 3 August 2009

No share certificates may be dematerialised or rematerialised between Monday, 27 July 2009 and Friday, 31 July 2009, both days inclusive.

Dividend cheques will be posted and electronic payments made, where applicable, to certificated shareholders on the payment date. Dematerialised shareholderswill have their account with Central Securities Depository Participant or broker credited on the payment date.


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ionAdcorp Holdings stats from 1 March 2008 to 28 February 2009 2009 2008

Closing price of Adcorp Holdings (at 28 February) (cents) 2 050 3 555Total number of trades (million) 13,9 25,0Total value traded (million rands) 385,5 917,2Price of shares traded – highest (cents) 3 625 4 500Price of shares traded – lowest (cents) 2 000 2 900Total value traded as % of year-end market cap 34,7 50,8Total value traded as % of average market cap 26,4 51,5

1 500

1 750

2 000

2 250

2 500

2 750

3 000

3 250

3 500

3 750

4 000

2004 2005 2006 2007 2008 2009

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FIVE-YEAR SHARE PRICE PERFORMANCE

2000

2200

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2600

2800

3000

3200

3400

3600

3800

Mar2008

Apr May Jun Jul Aug Sept Oct Nov Dec Jan2009

Feb

cents

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50 000

100 000

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200 000

250 000

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450 000

Mar2008

Apr May Jun Jul Aug Sept Oct Nov Dec Jan2009

Feb

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ADCORP PRICE CHART – DAILY CLOSING PRICE

ADCORP VOLUME CHART – 1 MARCH 2008 TO 29 FEBRUARY 2009


Notice of annual general meeting

ADCORP HOLDINGS LIMITED(Incorporated in the Republic of South Africa)

(Registration number 1974/001804/06)

Share code: ADR

ISIN: ZAE000000139

(“Adcorp” or “the company”)

Notice is hereby given that the annual general meeting of the shareholders of Adcorp Holdings Limited will be held at Block A, 28 on Sloane, Sloane Street,

Bryanston, Johannesburg, on Wednesday, 26 August 2009 at 09:00 to consider and, if deemed fit, to pass, with or without modification, the following

resolutions:

AS ORDINARY RESOLUTIONS1. To receive, approve and adopt the audited annual financial statements for the period ended 28 February 2009.

2. To elect Amanda Alback as a director of the company (CV on page 25).

3. To re-elect Frederik Van Zyl Slabbert as a director of the company (CV on page 24).

4. To resolve that 1 500 000 shares in the authorised but unissued share capital of the company be and are hereby placed under the control of the directors of

the company as a specific authority in terms of section 221(2) of the Act. These shares are specifically for the issue of shares in order to meet Adcorp’s

commitment in terms of the Adcorp Employee Share Trust.

5. To resolve that 10% of the ordinary shares in the authorised but unissued share capital of the company be and are hereby placed under the control of the

directors of the company as a specific authority in terms of section 221(2) of the Companies Act, 61 of 1973, as amended (the Act).

6. To resolve that Deloitte & Touche be reappointed as auditors of the Group with David Uys as lead partner until the next annual general meeting.

7. To transact such other business as may be transacted at an annual general meeting.

SPECIAL RESOLUTION Resolved that the directors of the company be and are hereby authorised by way of a general authority to facilitate the repurchase by the company, or any of its

subsidiaries, of shares in the capital of the company, as they in their discretion, from time to time, deem fit. The repurchase will be in accordance with the

provisions of the Act, the JSE Listings Requirements and the articles of association of Adcorp, from time to time, which are:

• the repurchase of securities being effected through the order book operated by the JSE trading system and done without any prior understanding or

arrangement between the company and the counterparty;

• this general authority shall be valid only until the company’s next annual general meeting, or for 15 months from the date of this special resolution, whichever

period is shorter;

• an announcement will be published as soon as the company has acquired ordinary shares constituting, on a cumulative basis, 3% or every 3% thereafter, of

the number of ordinary shares in issue prior to the acquisition pursuant to which the aforesaid 3% threshold is reached, containing full details of such shares;

• any general repurchase shall not in the aggregate in any one financial year exceed 20% of the company’s ordinary issued share capital;

• in determining the price at which ordinary shares issued by the company will be acquired by the company and/or its subsidiaries in terms of this general

authority, the maximum premium at which such ordinary shares may be acquired will be no more than 10% above the weighted average of the market value

at which such ordinary shares are traded on the JSE, as determined over the five trading days immediately preceding the date of repurchase of such ordinary

shares by the company and/or its subsidiaries; and

• the sponsor of the company provides a letter to the JSE on the adequacy of working capital in terms of section 2.12 of the JSE Listings Requirements, before

the share repurchase commences.


Having considered the effect of the maximum repurchase of 20% of the company’s issued share capital in any one financial year, the directors are of the

opinion that:

• the company’s and the Group’s consolidated assets, fairly valued according to generally accepted accounting practice and on a basis consistent with the last

financial year of the company, will, after such payment, exceed their consolidated liabilities for a period of 12 months following the date of the annual

general meeting;

• the company’s and the Group’s ordinary share capital and reserves will, after such payment, be sufficient to meet their needs for a period of 12 months

following the date of the annual general meeting;

• the company and the Group will, after such payment, have sufficient working capital to meet its needs for a period of 12 months following the date of the

annual general meeting;

• the company may, at any point in time, only appoint one agent to effect any repurchase on the company’s behalf;

• the company may only undertake a repurchase of securities if, after such repurchase, it still complies with the shareholder spread requirements as set out in

the JSE Listings Requirements; and

• the company or its subsidiaries may not repurchase securities during a prohibited period, as defined in the JSE Listings Requirements.

The board of directors of Adcorp will use this authority as and when opportunities arise.

The effect of this special resolution and the reason therefore is to grant the company and its subsidiaries a general approval in terms of the Companies Act

No. 61 of 1973, as amended, for the acquisition by the company of its own shares and/or acquisition by a subsidiary of shares in the company, which general

approval shall be valid until the next annual general meeting of the company, provided that this general authority shall be valid only until the company’s next

annual general meeting or for 15 months from the date of special resolution number 1, whichever period is shorter. Such general authority will provide the board

with the flexibility to repurchase shares should same be in the interest of the company at the time while the general authority subsists.

OTHER DISCLOSURES IN TERMS OF SECTION 11.26 OF THE JSE LISTINGS REQUIREMENTS• Directors and management (pages 24 and 25)

• Major shareholders of Adcorp (page 84)

• Directors’ interests in securities (page 75)

• Share capital of Adcorp (page 61)

MATERIAL CHANGEThere have been no material changes in the affairs or financial position of Adcorp and its subsidiaries since the date of signature of the audit report and the date

of this notice.

DIRECTORS’ RESPONSIBILITY STATEMENTThe directors, whose names are given on pages 24 and 25 of the annual report, collectively and individually accept full responsibility for the accuracy of the

information pertaining to the special resolutions and certify that to the best of their knowledge and belief there are no facts that have been omitted which would

make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this resolution contains all such

information as required by law and the JSE Listing Requirements.

LITIGATION STATEMENTIn terms of section 11.26 of the Listings Requirements of the JSE, the directors, whose names are given on pages 24 and 25 of the annual report of which this

notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the

recent past, being at least the previous 14 months, a material effect on the Group’s financial position.

VOTING AND PROXIESIf you are a certificated or own name dematerialised shareholder and unable to attend the annual general meeting of ordinary shareholders to be held on

Wednesday, 26 August 2009 at 09:00 at the premises of the company on Block A, 28 on Sloane, Sloane Street, Bryanston, Johannesburg, and wish to be

represented thereat, you must complete and return the attached forms of proxy in accordance with the instructions therein to be received by the transfer

secretaries by not later than 09:00 on Tuesday, 25 August 2009.


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Notice of annual general meeting (continued)

If you have dematerialised your shares with a Central Securities Depository Participant (CSDP) or broker, other than with own name registration, you

must arrange with them to provide you with the necessary letter of representation to attend the annual general meeting or you must instruct them as to how you

wish to vote in this regard. This must be done in terms of the agreement entered into between you and the CSDP or broker, in the manner and cut-off time

stipulated therein.

Additional proxy forms are obtainable from the company secretary and must be deposited at the transfer secretaries not less than 24 hours before the meeting.

By order of the board

LJ Sudbury

Company secretary

15 July 2009


Form of proxy

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ADCORP HOLDINGS LIMITED (Incorporated in the Republic of South Africa)(Registration number 1974/001804/06)Share code: ADRISIN: ZAE000000139(“Adcorp” or “the company”)

For use at the annual general meeting of shareholders of Adcorp Holdings Limited to be held at 09:00 on Wednesday, 26 August 2009.

For use by the certificated holders or holders of dematerialised shares in their own name at the annual general meeting to be held at 09:00 on Wednesday, 26 August 2009 at the premises of the company on Block A, 28 on Sloane, Sloane Street, Bryanston, Johannesburg.

If shareholders have dematerialised their shares with a Central Securities Depository Participant (CSDP) or broker, other than with own name registration,they must arrange with the CSDP or broker to provide them with the necessary letter of representation to attend the annual general meeting or the shareholdermust instruct them as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the shareholder and theCSDP or broker, in the manner and cut-off time stipulated therein.

For the annual general meeting

I/We

(Name/s in block letters)of

(Address in block letters)being a member/s of the abovementioned company and holding shares in Adcorp Holdings Limited, and entitled to vote,do hereby appoint (refer to note 1 at the end of this proxy form):

or, failing him/her,

Richard Pike of Block A, 28 on Sloane, Sloane Street, Bryanston, Johannesburg, or failing him, the Chairman of the meeting as my/our proxy(ies) to voteon a poll on my/our behalf at the annual general meeting of the company to be held at 09:00 on Wednesday, 26 August 2009 and at any adjournment thereof.

Please indicate with an “X” in the spaces below how you wish your proxy to vote in respect of the resolutions to be proposed, as contained in the notice ofthe abovementioned annual general meeting.*I/We desire my/our proxy to vote on the resolutions to be proposed, as follows:

For Against Abstain

Ordinary resolution 1 (Adopt audited financial statements)

Ordinary resolution 2 (Elect Amanda Alback)

Ordinary resolution 3 (Re-elect Frederik Van Zyl Slabbert)

Ordinary resolution 4 (Employee share scheme shares placed under control of directors)

Ordinary resolution 5 (10% of unissued shares placed under the control of directors)

Ordinary resolution 6 (Reappointment of Deloitte & Touche – lead partner D Uys)

Ordinary resolution 7 (Transact other business)

Special resolution (General authority to repurchase shares)

Signed by me/us this day of 2009

Signature

Assisted by me (where applicable) (see note 4 on reverse of proxy form)

Full name/s of signatory if signing in a representative capacity (see note 5 on reverse of proxy form)

* If this form of proxy is returned without any indication of how the proxy should vote, the proxy will exercise his/her discretion both as to how he/she votes and as to whether or not he/sheabstains from voting.


Notes

1. A member entitled to attend and vote at the abovementioned meeting is entitled to appoint one or more proxies to attend, speak and, on a poll, vote inhis/her stead or abstain from voting. The proxy need not be a member of the company.

2. To be valid, this form of proxy must be completed and returned to the company’s transfer secretaries, Link Market Services (SA) (Pty) Limited, 11Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000), to be received by not later than 09:00 on Tuesday, 25 August 2009.

3. In the case of a joint holding, the first-named only need sign.

4. The authority of a person signing a proxy in a representative capacity must be attached to the proxy unless that authority has already been recorded by the company.

5. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documentsestablishing capacity are produced or have been registered with the transfer secretaries.

FSC – The FSC (Forest Stewardship Council) is asystem of forest certification and product labelling.It identifies wood and wood-based products fromwell-managed forests. It is applicable to suppliersof wood products from certified forests who wish to label as FSC. For more information visit http://www.fsc.org

PEFC – The PEFC (Programme for theEndorsement of Forest Certification schemes)provides a framework for the development of andmutual recognition of national or sub-nationalforest certification schemes that have beendeveloped locally according to internationalrecognised requirements for sustainable forest managements. For more information visit http://www.pefc.org

G R A P H I C O R 3 9 4 8 6


www.adcorp.co.za

PO-TEN-TIALHaving or showing the

capacity to become ordevelop into something in the

future. From late Latin potentialis,from potentia ‘power,’ from

potent – ‘being able’

Documents

Proudly EMPOWERING South Africans - Adcorp · 6 Adcorp Annual ReportThe Power of Potential ABOUT ADCORP The Adcorp Group has a rich history dating back to 1978. It has been the leading